ABSTRACT
McNulty pointed out that while all other forms of competition in economic theory represent a mixture of monopoly and competition, perfect competition by contrast is the absence of competition, although for different reasons than pure monopoly, namely that monopoly is a market situation in which intra-industry competition has been defined away by identifying the firm as the industry. The transfer and innovation mechanisms essentially create two distinct markets describing completely different groups of firms and competitive situations. Although the existence of a monopoly creates incentives to develop substitutes for a monopolistically controlled resource, attainment of a monopoly position may serve as an incentive to develop a scarce product in order to enjoy the monopoly thus created. It seems that the evidence regarding mergers and acquisitions shows that they have no bearing on the level of market concentration in the long run.
