Monopoly competition

Of course, the three values of capitalist justice are only shaped if the market embodies the seven conditions that define perfect competition. If even one of the situation is not present, then the market cannot assert to promote those values. This, in fact, is the most important limitation of free market morality: because free markets are not perfectly competitive, they do not achieve the moral values.

Monopoly Competition

In a monopoly, two of the seven conditions are absent: there is only one seller, and other sellers cannot enter the market. As the case of Alcoa exemplifies, such markets are far from the perfectly competitive model. Although Alcoa's patents on the production of aluminum ran out in 1909, it remained the only producer of virgin aluminum for another thirty years. No competitor could enter the market because their startup costs would have been too great, and they lacked Alcoa's knowledge. Alcoa and other monopolies like Standard Oil, Western Electric and the American Tobacco Company were thus able to fix output at a quantity less than equilibrium, making require so high that they reaped excess profits. (Had entry into these markets been open, the excess profits would have drawn others into producing these goods until prices dropped, but this does not happen in a monopoly.)

Monopolistic markets and their high prices and profits infringe capitalist justice because the seller charges more than the goods are worth. Thus, the prices the buyer must pay are unjust. In addition, the monopoly market results in a decline in the competence of the system. First, the monopoly market allows resources to be used in ways that will produce shortages of those things  buyers  want  and  cause  them  to  be  sold  at  higher  prices  than  necessary.  Second, monopoly markets do not support suppliers to use resources in ways that will minimize the resources consumed to produce a certain amount of a commodity.

A monopoly firm is not positive to reduce its costs and is therefore not motivated to find less costly methods of production. Third, a monopoly market allows the seller to introduce price differentials that chunk consumers from putting together the most satisfying bundle of commodities they can purchase given the commodities accessible and the money they can spend. Because everyone must buy from the monopoly firm, the firm can set its prices so that some buyers are forced to pay a higher price for the same goods than others.

In effect, those who have a greater desire for an item will buy less, and those who desire an item less will buy more, which is a great inefficiency, and means that consumers are no longer able to purchase the most pleasing bundle of goods they can.