ABSTRACT
A condition of monopolistic competition exists when each of two or more sellers supplies a considerable part of the market with which they are connected. The range of indeterminateness extends over a distance which is larger in a perfect than it is in an imperfect market, and in either sort of market is diminished as the number of monopolists is increased above two. The indeterminateness just described exists under monopolistic competition, even though neither of the monopolists “hopes to ruin the other by cut-throat prices.” In many instances of monopolistic competition, however, price warfare—or cut-throat competition—does, in fact, take place. It consists in the practice of selling at a loss in order to inflict injury on a rival. Cut-throat competition proper occurs only when the sale price of any quantity of commodity stands below the short-period supply price of that quantity.
