> So if we grant that those costs were not heavily influenced by various other legislation (they were), then you have something near a monopoly for a small geographic region.

> But then what? If the quarry used their monopoly power to the point where it made sense for a consumer to ship in gravel from farther away then the quarry would be losing business. So even in that case there was some competitive pressure to keep prices lower than monopoly theory would suggest.

That's pretty much what I said - the price limit for what the "monopolist" can charge is limited by the alternatives, in this case the price for shipping in gravel from quarrels further away, not by the actual cost of production.  Now if it doesn't cost too much shipping in gravel from quarrels further away, it doesn't matter that much for the end consumer anyway.

On a related note, I've heard quite some Russian fishing boats unload their cargo in Tromsø, Norway and ships the load by trucks through Finland to Moscow rather than by rails from Murmansk because the harbour fees in Murmansk are too high.