There is a distinction between controlling the supply of a product and producing or selling most of the supply of a product.
“Dominant” producers who sell a major portion of a product’s supply usually have no control over the supply. They have no power to set any lower level of industry output and a higher price than that which would prevail in a market with many suppliers and no dominant firm.
Usually, a dominant producer is the most efficient firm in the industry. Its large output is the result of its efficiency in supplying the market. The market price is as low as it would be with many producers frequently lower.
Any attempt by a dominant firm to restrict its own supply and increase price after reaching a “dominant” position simply results in the expansion of output by other firms, the entry of additional firms, and loss of its dominance. A dominant firm can keep its dominance only by behaving competitively.
The fact that there is a dominant firm, or small group of firms, in an industry is evidence of competitive behavior not of monopolization.
via The Attack on Concentration: Newsroom: The Independent Institute.
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