Lindblom - The Market System - Afghan Journalists' Committee

Inefficiencies 157quently, most enterprises hold some power over price, forthe customer cannot find exactly the same performance orobject from any other source.Enterprises also create or fall into cartels—explicit ortacit agreements on price and other policies that restrainthem from competing with each other to the degree thatwould push them strongly to efficiency prices. Patents alsopermit price manipulation, as do many licensing laws andother legally imposed constraints on trade. For all thesereasons some degree of arbitrary pricing by sellers runsthroughout the market system.Because it provides the enterprise with some securityagainst competitors and also provides higher returns, monopolisticpowers over price sometimes stimulate innovationand therefore should not be simply categorized as inefficient.On the other hand, as enterprises turn increasinglyaway from providing goods and toward providing services,monopoly may become increasingly exploitative. A consumeris often at the mercy of a television repair service orphysician, not knowing just what each will do or how servicediffers from what other repair services or physiciansmight offer. Opportunities open to service enterprises to deceiveand overcharge are great. This may be a more significantmonopoly problem than the overpricing of goods bylarge corporations.As an inefficiency of the market system, monopolyhardly compares with inefficiencies from such spillovers asenvironmental pollution and urban blight. Nor does it appearthat the arbitrary prices of monopoly distort prices tothe degree that the state does. The two sources of inefficiencyare often combined. For example, the state establishesa tariff to wall off foreign competitors, thus grantingmonopoly powers to the protected enterprises. Or it curbs