For the sixth law of competition we have: _In any given industry the tendency toward the death of competition (monopoly) varies directly with the amount of capital required for each competing unit._ This law is proven in part by the preceding laws; for when a large capital is required for each competing unit, the number of competitors will be small and the tendency toward monopoly will be strong; but it may also be proven independently. Business men, before they form a combination, are certain to ask whether new competitors are likely to enter the field against the combination. Now, as we have seen in very many cases in the preceding chapters, when there is a great amount of capital required, new competitors will be very unlikely to enter the field. If there is but little capital required, they will be very apt to do so, being tempted by the prospect of large profits at the monopoly's prices. But they know that the combination will concentrate its strength to fight them in every way; and if they must invest a great deal of money in buildings, plant, etc., to start operations, they will be apt to think twice before they take the field against the combination.
The seventh law of competition is: _In any given industry in which natural agents are necessary, the tendency toward the inequality of competition (monopoly) tends to vary directly with the scarcity of available like natural agents._
The influence of limited natural agents in promoting the growth of monopolies is a matter of the greatest importance. That the law is true, is evident upon slight investigation. For if some especial gift of Nature is a necessity to any industry, and those who are engaged in that industry can secure all the available gifts of Nature of that sort, there is no opportunity for new competitors to enter the field.
It is to be noted that in this seventh law we have used in apposition with the term monopoly, the term "inequality of competition" instead of "death of competition," as in the preceding laws. We are now in need of a definition of the term monopoly. Webster defines it as "the sole control over the sale of any line of goods"; Prof. Newcomb says "a monopoly is the ownership or command by one or a limited number of persons of some requisite of production which is not solely a product of human labor"; Sturtevant says "a monopoly is such a control of the supply of any desirable object as will enable the holder to determine its price without appeal to competition." To the first definition we object that it is both narrow and indefinite. The second seems to omit such important classes of monopolies as the combinations to limit competition; and Sturtevant's definition is unscientific in this: Hardly any monopoly exists whose holders can without limit determine the price of its product. If the price continues to rise, competition in some form will appear. Take, for example, the business of transporting goods from New York to San Francisco; if all the railway lines combine to form a monopoly, the competition of ocean steamers via Panama would eventually stop the rise in rates, if no other outside competition stopped it before. The owners of a rich mine have a real monopoly, though they cannot raise the price above a certain point without being undersold by the owners of poorer mines or those more remote from market. Consideration of these facts lead us to construct the following definition: _A monopoly in any industry consists in the control of some advantage over existing or possible competitors by which greater profits can be secured than these competitors can make._ For the law of monopolies we have: _The degree of a monopoly depends upon the amount of advantage which is held over existing or possible competitors._ When the advantage of the monopoly is so great that no other competitor will try to do business in competition with it, we may rightly say that competition is dead. The great share of the monopolies which are based on this seventh law of competition, those due to the control of natural agents, only restrict competition by the attainment of an advantage over their competitors, and do not destroy it.