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The monopoly, a limit on competition, is an example of market failure. Competition among merchants in foreign trade was common in ancient times, and it has been a characteristic of mercantile and industrial expansion since the middle Ages. Economic theorists had come to regard competition as a natural outgrowth of the operation of supply and demand within a free market economy. The price of an item was seen as ultimately fixed by the confluence of these two forces. Early capitalist economists argued that supply-and-demand pricing worked better without any regulation or control. Their model of perfect competition was marked by absolute freedom of trade, widespread knowledge of market conditions, easy access of buyers to sellers, and the absence of all action restraining trade by agencies of the state...
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