Lindblom - The Market System - Afghan Journalists' Committee

Inefficiencies 155ants only under limiting rules. In some circumstances, anattorney cannot abandon a client. The telephone, gas, orelectric company is restricted in terminating service to customerswho do not pay. Clearly market inefficiency on thiscount is widely recognized.The burdens of withdrawal or eviction throw light ondifficulties in moving into market systems in Russia andEastern Europe. Millions of people there see the fixed claimsthey enjoyed under communism being reduced, and theyare frightened by employers’ new options to terminate theiremployment.Arbitrary PricesAlthough the efficiency of market systems depends heavilyon efficiency prices, we have already noted that real-worldmarket systems often establish prices that are arbitrary tosome significant degree. The practices are frequent enoughto reduce significantly the market system’s claim to efficiency.Of the two sources of arbitrary prices—monopoly andgovernmental controls over prices—monopoly, though perhapsthe lesser of the two, is perhaps more frequent. Notwithstandingthe complaints, monopoly is a lesser source ofinefficiency than commonly thought because, in the extremeform in which it is often imagined, it does not exist.All sellers compete with all other sellers, and each limitsthe power of the others to manipulate prices. Although invery few markets is there enough competition to make aprice an ideal or near-perfect efficiency price, in many marketsthe approximation is close. In many more it is at leastacceptable. Every market is a long way away from singlesellercontrol of price, far from the “mono” in monopoly.