he is
underbid by rivals. The public is the gainer to the extent of the
reduction which takes place in the cost of the goods as delivered to
consumers in the market at B; nevertheless, the situation still
involves a limited monopoly. The sailing vessel now has no effective
rival, and can charge "what the traffic will bear," and that is very
nearly the cost of conveying the goods by wagons. The advent of the
vessel has benefited the public; yet it is regarded as constituting a
new monopoly, and the benefit which the public gets is less than it
will get when a really effective competitor of the sailing craft makes
its appearance.

[Illustration:
C
|
. ABANDONED
| ROUTE
.
|
.
|
v
A - - - - - - - - - - - - - - ->B
\ ABANDONED ROUTE /
\ /
\____ /
\___ __________/
\____/
WATER ROUTE USED
]

_A Principle governing Charges by Unequal Competitors._--The principle
which, in this instance, governs the freight charges is one which is
active in all departments of production. We have seen that a maker of
goods who has just acquired a monopoly of a superior method may, for a
time, charge what the goods cost as made by inferior processes. If the
manufacturer has some patented machinery which effects a great
economy, he is not at once obliged to govern his prices by what the
goods cost in his own mill, but may charge about what they would cost
if they were made by the inferior machinery which he formerly used.
This is what they still cost in the mills of certain rivals, and it
thus appears that competition of a sort fixes his price for the goods
he creates, but it is the competition of less capable producers and
fails to benefit the public as the rivalry of equals would do. If
there is evil in such a monopoly as this, it is not because the public
is injured by the advent of the cheaper method. The improvement
usually begins to confer benefit on consumers at the moment of its
arrival, through the effort of the efficient producer to secure
traffic. It causes the prices to go down, though the fall is at first
on