INDUSTRY STRUCTURE, MARKET RIVALRY, AND PUBLIC POLICY all capital gain if accountants could value a priori decisions that turn out to be correct ex post. During the period when such decisions determine the course of events, output will tend to be concentrated in those firms fortunate enough to have made the correct decisions. None of this is necessarily monopolistic(although monopoly may play some role). Profit does not arise because the firm creates artificial scarcity through a reduction in utput. Nor does it arise because of collusion Superior performance can be attributed to the combination of great uncer- tainty plus luck or atypical insight by the management of a firm. It is not until the experiments are actually tried that we learn which succeed and which are in, it is the shareholder that has captured (some of)the value, positive or negative of past decisions. Even though the profits that arise from a firms activities may be eroded by competitive imitation, since information is costly to obtain and techniques are difficult to duplicate, the firm may enjoy growth and a superior rate of return for Superior ability also may be interpreted as a competitive basis for ing a measure of monopoly power. In a world in which information is and the future is uncertain, a firm that seizes an opportunity to better serve customers does so because it expects to enjoy some protection from rivals be cause of their ignorance of this opportunity or because of their inability to imitate quickly. One possible source of some monopoly power is superior entrepreneurship. Our patent, copyright, and trademark laws explicitly pro vide as a reward for uncovering new methods (and for revealing these methods), legal protection against free imitation, and it may be true in some cases that an astute rival acquires the exclusive rights to some resource that later becomes valuable. There is no reason to suppose that competitive be- havior never yields monopoly power, although in many cases such power may be exercised not by creating entry barriers, but through the natural frictions and ignorance that characterize any real economy. If rivals seek better way to satisfy buyers or to produce a product, and if one or a few succeed in such endeavors, then the reward for their entrepreneurial efforts is likely to be some(short term)monopoly power and this may be associated with increased industrial concentration. To destroy such power when it arises may very well remove the incentive for progress. This is to be contrasted with a situation in which a high rate of return is obtained through a successful collusion to restrict output; here there is less danger to progress if the collusive agreement is penalized. Evidence presented below suggests that there are definite dangers of decreasing efficiency through the use of deconcentration or anti-