Perfect capitalism forces the merchants to operate at the point of starvation -- thus providing the customer with the lowest price. If a particular merchant is perceived as making too much profit, another merchant will seize the opportunity and provide a product at a slightly lower price. This behavior drives merchants to enter and leave the market at the point of equilibrium (starvation).

Unless -- superior marketing changes customer perception or a superior manufacturing process lowers costs for a particular merchant. This is why patents and trade secrets are so important.

Edit: From my Eco 101: "Merchant" is anyone providing a product. There is not much distinction between retail, wholesale, manufacturing, farming, etc. The fundamental assumption is that no single "Merchant" is in a monopoly position, able to control the final price. Apple is not able to set the price for computers as a general category, but it can set the price for its own brand. PC's are a prime example of market pricing. For a brief period IBM was the big player, but other companies showed that they could provide similar results at a lower price. The consumer won, IBM got bored and left the market.