r, we should have a regime of monopoly with its
unendurable evils; and if, on the other hand, the regulator were as
efficient as it should be, we should have a natural system in which
complete freedom would rule. The limitless difference between these
conditions measures the importance of potential competition.[1]

[1] For an early statement of this principle the reader is
referred to the chapter on "The Persistence of Competition,"
by Professor F. H. Giddings, in a work entitled "The Modern
Distributive Process," written jointly by Professor Giddings
and the present writer. This chapter first appeared as an
article in the _Political Science Quarterly_ for 1887.

_Cost of Production in Independent Mills a Standard of Price._--A
consolidated company will ultimately have a real but small advantage
over a rival in the cost of producing and selling its goods; but at
present the advantage is often with the rival. His plant is often
superior to many of those operated by the trust. When the combination
brings its mills to a maximum of efficiency and then reaps _the
further advantage which consolidation itself insures_, it will be able
to make a small profit while selling goods at what they cost in the
mills of its rival. This cost which a potential competitor will incur
if he actually comes into the field sets the natural standard of price
in the new regime of seeming monopoly; and it will be seen that if
this natural price really ruled, the monopoly would have only a formal
existence. It would be shorn of its power to tax the public.

_Partial Monopolies now Common._--What we have is neither the complete
monopoly nor the merely formal one, but one that has power enough to
work injury and to be a menace to industry and politics. If it long
perverts industry, it will be because it perverts politics--because it
baffles the people in their effort to make and enforce laws which
would keep the power of competition alive. In terms of our table the
subgroups are coming to resemble single overgrown corporations. Each
of them, where this movement is in progress, is tending toward a state
where it will have a single _entrepreneur_--one of those overgrown
corporations which resemble monopolies and are commonly termed so.

Complete monopolies, as we have said, they are not; and yet, on the
other hand, they are by no means without monopolistic power. They are
held somewhat in check by the potential competition