The producer is maximizing his profits, which results in a deadweight loss to both consumer and producer surplus, with some consumer surplus being transferred to the producer. This basically means that CR shafts the buyer by artificially capping production to inflate prices far enough above costs to limit demand to a lower than efficient output. An efficient equilibrium would be perfect 1st degree price descrimination, in which case the seller charges the maximal price each person will pay, and each person pays a different price (of course the seller doesnt sell for less than the marginal costs). This would transfer all the consumer surplus to producer surplus, but it would result in a pareto efficent allocation. in a perfectly competitive market, the producer produces the quantity at which his marginal cost of the output, i.e. the cost of producing one more, equals the marginal revenue (i.e. the price of one unit) because all producers face the same market demand function on which they have an effect that approaches zero. Essentially, they are price takers instead of price setters. If the producer chooses the price, he produces a market inefficient outcome because there is some amount of surplus right of the actual equilibrium which simply is never generated. This is the fundamental issue with patents, and the reason that they expire after several years. Without them, there is no incentive to invest in R&D, and with them you end up gauging the customer....