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Quotation of the Day…

… is from page 70 of Israel Kirzner’s superb March 2000 Freeman essay titled “The Irresistible Force of Market Competition,” as this essay is reprinted in Competition, Economic Planning, and the Knowledge Problem (Peter J. Boettke and Frédéric Sautet, eds., 2018), which is a volume in The Collected Works of Israel M. Kirzner (original emphasis):

A merger, provided the potential entry of others has not been and is not being artificially blocked, is itself an entrepreneurial act, a competitive act; the blockage obstructs the way in which market competition is able to discover the best size of firms and thus the lowest cost at which production can be maintained.

DBx: Consumers care about prices. They care also about non-price aspects of goods and services, including speed and reliability of delivery, friendliness of customer assistance, and the likelihood that firms will be around years from now. And consumers are willing to pay higher prices in exchange for improved non-price aspects of products.

But even if consumers cared only about prices – about paying prices as low as possible without much concern at all about product quality – the industrial structure that will reduce producers’ costs to a minimum cannot be divined in the abstract. It must be discovered and tested in actual market competition. Antitrust interventions that block mergers obstruct this vital discovery and testing feature of markets.