The reason there is so little price variation is that if one mail-order firm charged a higher price than the competitor, consumers would purchase from another retailer.

Monopoly
A market structure in which a single firm serves an entire market for a good that has no close substitutes.

MONOPOLY POWER
In determining whether a market is characterized by monopoly, it is important to specify the relevant market for the product. For example, utility companies are local monopolies in that only one utility offers service to a given neighborhood. To be sure, there are almost as many utility companies as there are cities in the world, but the utilities do not directly compete against one another for customers. The substitutes for electric services in a given city are poor and, short of moving to a different city, customers must pay the prices for local utility services or go without electricity. It is in this sense that a utility company is a monopoly in the local market for utility services.

When one thinks of a monopoly, one usually envisions a very large firm. This needn’t be the case, however; the relevant consideration is whether there are other firms selling close substitutes for the good in a given market. For example, a gas station located in a small town that is several hundred miles from another gas station is a monopolist in that town. In a large town there typically are many gas stations and the markets for gasoline is not characterized by monopoly.

The fact that a firm is the sole seller of a good in a market clearly gives that firm greater market power than it would have if it competed against other firms for costumers. A monopolist does not have unlimited power, however. In summary, the monopolist is restricted by consumers to choose only those price-quantity combinations along the market demand curve. The monopolist can choose a price or a quantity, but not both. The monopolist can sell higher quantities only by lowering the price. If the price is too high consumers may choose to buy nothing at all.