zlacker

In my experience, small businesses often charge more than larger businesses, perhaps because they don't benefit from an economy of scale or increased negotiating leverage with suppliers. For example, compare Wal-Mart to a small general store or Home Depot to a small hardware store. It's much more common that the big box stores charge less for the same products.

Also, from what I remember of microeconomics, the free market model assumes a number of things that are not always true in reality, at least not all at the same time: robust competition among suppliers, perfect knowledge among consumers, rational decision-making behavior. Like any model, the more reality differs from the assumptions, the worse the model is at prediction, but the basic laws of supply and demand, where the price of a good is where the supply and demand curves meet, still hold.