DOI Page / Citation link:
https://doi.org/10.11588/diglit.42346#0095
TRUE VS. FALSE COMPETITION 83
man is crestfallen. “I—I figured it as low as I could and
do it right.”
After a few more discouraging remarks and references
to other and lower offers, the owner says magnanimously,
“I’ll tell you what I will do, if you’ll throw off fifty dol-
lars, the job is yours.”
There is no use protesting; the shadow of the unknown
quantity, of the other fellow whose figure is a “little under,”
is over the whole affair; the man is helpless, he has no
means of ascertaining the truth of the owner’s statement,
he is on a footing of jealous distrust with the other car-
penters in the village, he would not think of asking them,
he takes the contract, does an honest piece of work and
comes out a loser.
Is there any real, any true competition in that transac-
tion? None at all—only false or pseudo competition.
The one bidder—like the one runner—thinks he is com-
peting with others; the owner knows he is not.
“But,” says the man in the street, “it was the possibility
other competitors might bid that made the price so low.”
No, the figure bid was based upon the man’s own neces-
sities; if he had not been in desperate need of work he
would not have made that final reduction which occasioned
the loss.
The public is saturated with the notion that potential
competition is true competition, that competition, like bogey
men, should be present in the dark to frighten prices down,
that anything like friendly intercourse between competi-
tors is a step toward the suppression of competition and
reprehensible. Potential competition is competition, but it
is not true competition; it is false competition of the most
demoralizing nature.
But suppose the owner does get estimates from other
carpenters, the situation remains unchanged; each carpen-
ter prepares his estimate under precisely the same condi-
man is crestfallen. “I—I figured it as low as I could and
do it right.”
After a few more discouraging remarks and references
to other and lower offers, the owner says magnanimously,
“I’ll tell you what I will do, if you’ll throw off fifty dol-
lars, the job is yours.”
There is no use protesting; the shadow of the unknown
quantity, of the other fellow whose figure is a “little under,”
is over the whole affair; the man is helpless, he has no
means of ascertaining the truth of the owner’s statement,
he is on a footing of jealous distrust with the other car-
penters in the village, he would not think of asking them,
he takes the contract, does an honest piece of work and
comes out a loser.
Is there any real, any true competition in that transac-
tion? None at all—only false or pseudo competition.
The one bidder—like the one runner—thinks he is com-
peting with others; the owner knows he is not.
“But,” says the man in the street, “it was the possibility
other competitors might bid that made the price so low.”
No, the figure bid was based upon the man’s own neces-
sities; if he had not been in desperate need of work he
would not have made that final reduction which occasioned
the loss.
The public is saturated with the notion that potential
competition is true competition, that competition, like bogey
men, should be present in the dark to frighten prices down,
that anything like friendly intercourse between competi-
tors is a step toward the suppression of competition and
reprehensible. Potential competition is competition, but it
is not true competition; it is false competition of the most
demoralizing nature.
But suppose the owner does get estimates from other
carpenters, the situation remains unchanged; each carpen-
ter prepares his estimate under precisely the same condi-