4) It also implies accepting another of Schumpeter's prescripts: that sometimes one large firm is best, when that firm can produce most cheaply (and, as Schumpeter noted, internalize the benefits of research and other ideas, which have free rider problems and will be underproduced in Adam Smith's world of pinmakers) (5) To put it otherwise,
atomistic competition may not be as efficient as other market structures.
It would seem more appropriate to attempt to list the conditions under which no price discrimination occurs: perfectly open markets, perfect information about prices on the part of consumers, no transactions costs, and a constant-cost industry structure--that is, precisely the conditions required for perfect or
atomistic competition.
Katz (2004, 19) argues that this price threshold was implemented in the past by public policies that sought
atomistic competition (For example the Robinson Patman Act 1936 in the United States), but that such an approach is anachronistic.
