Lindblom - The Market System - Afghan Journalists' Committee

156 What To Make of ItImagine a society with a single passenger airline. You flyon it or not at all. It can set high fares, as well as lose baggageand generally irritate its customers. Even so, its power toraise prices and its irresponsibility are greatly limited—notsatisfactorily curbed but nevertheless limited. Some pricesand abuses you will refuse to bear. You will go by train orbus, rent a car or drive your own, in some cases go by boat,or stay home. Such limits on the airline are more effectivethan might first appear, for it has to worry about the loss ofthose customers most likely to defect. Though you arecompelled by circumstances to travel by air, some other airlinecustomers are not.The seller’s capacity to control prices is constrained bythe availability of an alternative or substitute to which thebuyer can turn. That is the key idea in understanding monopoly:the availability to customers of alternatives or substitutes.All possible customer expenditures are least distantsubstitutes for each other. Alternatives to buying aHyundai include not only a Civic but a remodeling of one’sliving quarters, an expensive vacation, or dozens of thingsone could buy with what one saves by not buying a car. Alternativesto an overpriced breakfast cereal include notsimply another cereal, but other foods as well. For that matter,they include any other performance or object to whichone might turn rather than pay the asked price for the cereal.Like some other agriculturists, a sheep rancher may beonly one of thousands of enterprises offering the same productto buyers. Competition holds the rancher in a vise, withno power over price. In contrast, most enterprises offer—and intend to offer—services and goods somewhat differentfrom those of any other enterprise. Geisha canned pineappleis both slightly different from other pineapple and advertisedto be even more different than in fact it is. Conse-