MICHIGAN ACADEMY OF SCIENCE. 41 



ties and have come to feel that duplication of plant and equipment involves 

 a waste of capital less justifiable tliun in industries working under a competi- 

 tive regime. Mol•eo^er, we do not place reliance upon iwteutial competition 

 but have adopted a comprehensive scheme of government control. 



Are we to conclude then that potential competition has no part to play in 

 solving the problem of industrial monopoly? I think not because it limits the 

 field within which the monopolist may exploit the consumer. In the example 

 of borax previously mentioned the pre ence of potential comi>etition can keep 

 the price of borax from going higher than 12 cents a pound. It is not neces- 

 sary that the competitor come into the field in this case for his mere presence 

 is sufficient to keep the price of the commodity within due bounds. The same 

 function is performed by potential competition in the case of public utilities 

 but the limits are doubtless much greater. If the limits are very narrow in 

 the case of industrial monopoly the function performed by potential competi- 

 tion is such that it merits a great deal of importance. 



University of Michigan. 



