 price accomplished when output is restricted under conditions of inelastic demand, thus increasing the net income of the supplier. Even Mises, it will be recalled, employed the term in this manner and drew some fairly dismal welfare implications from the "restriction."
Rothbard argues, however, that there is no objective way to determine that such a price is a monopoly price or that such a "restriction" is antisocial. All we can know, according to Rothbard, is that all firms attempt to produce a stock of goods that maximizes their net income given their estimation of demand. They attempt to price (other things being equal) such that the range of demand above the asking price is elastic. If they discover that they can increase their monetary income by producing less—or even destroying existing stock—in the next selling period, then they do so.
Rothbard maintains that to speak of the initial price as the "competitive" price, and the second-period price as the "monopoly" price makes no objective sense. How, he asks, is it to be objectively determined that the first price is really the "competitive" price? Could it, in fact have been a "subcompetitive" price? Indeed, the entire discussion is absurd for Rothbard since there are no independent criteria that would allow either determination. All that can be known for sure, he argues, is that the prices both before and after the supply change are free-market prices.
Rothbard also argues that "monopoly" prices cannot be inferred by comparing such prices to prices charged for similar factors. So long as the factors are not perfectly identical in the eyes of buyers, the differences in price (or profits) are simply free-market determinations of value for different goods. And any talk of monopoly price or monopoly "gain" when two different factors or goods are being compared is analytically incorrect.28
Finally, the welfare implications concerning alleged monopoly prices would not follow even if such prices could exist. Since the inelasticity of demand for Rothbard is "purely the result of voluntary demands" of the consumers, and since the exchange (at the higher prices) is completely "voluntary" anyway, there is no way to conclude that consumers or their "welfare" have been injured.29 Thus, for Rothbard there is no social "problem" associated with monopoly in a free market. Monopoly prices cannot be defined logically, let alone established in a free market.
CRITICAL REVIEW OF AUSTRIAN MONOPOLY THEORY
The views of Kirzner and Mises that monopoly consists of exclusive control over the whole supply of some specific resource create a number of familiar difficulties. In the first place, there would appear to be no objective way to define beforehand some "homogeneous" stock of resources that might be monopolized. All individually owned stocks of a resource could be differentiated at least with respect to location; in addition, the private-property system itself necessarily imparts a "differentiation" to all privately owned stocks. Further, even identical units of some given stock might be regarded differently by potential users, and there would be no way to determine this beforehand. Hence, this view of monopoly could reduce logically to the notion that each and every unit of everyone's property stock is owned "monopolistically."
Rothbard, it will be recalled, was critical of this definition of monopoly because its all-inclusiveness made it "impractical," confusing, and, ultimately, "absurd." But we can be critical of it on different grounds, employing Professor Kirzner's own (correct) view of the competitive market process. It will be recalled that Kirzner had argued that the key to competition was freedom of entry and that entry was impossible if potential entrepreneurs could not gain access to monopolized resources.30 Yet, as has been noted above, if all individual stocks of resources are, in fact, monopolized, it would seem to follow that Kirzner's definition of monopoly would completely negate his own views on competition and market process. Indeed, it is difficult to understand how