For instance, if a small town has only one drugstore, which is barely able to survive, the owner might be described as enjoying a “monopoly”—except that no one would think of using the term in this context. There is no economic need or market for a second drugstore, there is not enough trade to support it. But if that town grew, its one drugstore would have no way, no power, to prevent other drugstores from being opened.

Now if a company were able to gain and hold a non-coercive monopoly, if it were able to win all the customers in a given field, not by special government-granted privileges, but by sheer productive efficiency—by its ability to keep its costs low and/or to offer a better product than any competitor could—there would be no grounds on which to condemn such a monopoly. On the contrary, the company that achieved it would deserve the highest praise and esteem.

What if a large, rich company kept buying out its smaller competitors or kept forcing them out of business by means of undercutting prices and selling at a loss—would it not be able to gain control of a given field and then start charging high prices and be free to stagnate with no fear of competition? The answer is: No, it could not be done. If a company assumed heavy losses in order to drive out competitors, then began to charge high prices to regain what it had lost, this would serve as an incentive for new competitors to enter the field and take advantage of the high profitability, without any losses to recoup. The new competitors would force prices down to the market level. The large company would have to abandon its attempt to establish monopoly prices—or go bankrupt, fighting off the competitors that its own policies would attract.

- Nathaniel Branden. Capitalism: The Unknown Ideal (1966).