pon prices and profits. Everything will hinge upon the
"elasticity of demand" in the particular case. If the object of the
monopoly satisfies a keen, widely-felt want, or stimulates a craving
for increased consumption among those who take off the earlier supply,
a large increase in supply may be attended by a comparatively small
fall in prices. Sometimes a large increase of supply at a lowered
price will, by reaching a new social stratum, or by forcing the
substitution of this article for another in consumption, so enlarge
the sale that though the margin of profit on each sale is small, the
net profit on the whole capital is very large. In all such cases of
great elasticity it may pay a monopolist to sell a large number of
articles at a low price.

Where the article belongs to that class in which the law of increasing
returns is strongly operative--_i.e._, where great economies in
expenses of production attend a larger scale of production, this
increase of supply and fall of prices may continue with no assignable
limit. On the other hand, where there is little elasticity of demand,
where an increase of supply can be taken off only at a considerable
fall of price, it will probably pay a monopolist to restrict
production and sell a small number of articles at a high price. It is
this motive which often induces the destruction of tons of fish and
fruit in the London markets for fear of spoiling the market. These
goods could be sold at a sufficiently low price, but it pays the
companies owning them to destroy them, and to sell a smaller number
which satisfies the wants of a limited class of people who "can afford
to pay." Now, when free competition exists among sellers, as among
buyers, this can never happen. It will always be to the interest of a
competing producer or dealer to lower his price below that which would
yield him the largest net profit on his capital were he a monopolist.
If he is a monopolist he will only lower his prices provided the
elasticity of demand in the commodity in question is so great that the
increased consumption will be so considerable as to yield him a larger
net profit. But if he is a competing dealer he does not look chiefly
to the consumption of the community, but to the proportion of that
consumption which he himself shall supply. The elasticity of demand,
so far as his individual business is concerned, is not limited to the
amount of the increased consumption of the community stimulated by