I want to sell esrogim this year at a very cheap price. Specifically, I can sell esrogim in open boxes at the price that chessed organizations charge for esrogim in closed boxes. I am not doing anything that is not fair and honest. Is there anything wrong with my doing so?
In order to answer your question, we must study the rules of competition.
The general rule is that the Gemara permits and even encourages competition. Thus, the authoritative opinion of R. Huna the son of R. Yehoshua (Bava Basra 21B) is that one may open a store right next to an existing store. In the time of the Gemara there was an issue of taxes and there was a leniency for fellow residents of the city since they paid local taxes and the proprietors of stores who did not reside in the city did not pay. However, now since the local authorities assess all stores equally this exclusion is not pertinent. This is ruled by the Shulchan Aruch (156, 5): “If a store exists in an alley, its owner may not object to someone who wishes to open a competing store.” The Rama merely adds that the first store can object to the opening of a rival store if its proprietor does not reside in the same city since then he doesn’t pay local taxes.
Nowadays, even though the exception for non-residents does not apply, it does apply if the competition works off the books, thus avoiding paying any taxes. This could apply in the esrog business since many of the vendors don’t pay taxes. Therefore, if you don’t pay taxes and the competition does, they could object to your competition.
However, there are situations where competition is not permitted. A very basic ruling was issued by the Aviyosof (Ra’avyo cited by Mordechai, Bava Basra 516). He was asked about a store which was opened near the entrance to a dead-end alleyway which already had a store situated deep inside the alleyway. (In those times stores were usually in a person’s house so one couldn’t simply rent another store.) He ruled that the second store was not allowed to open a competing store in that location. He reasons that anyone who wished to purchase an item which was carried by the first store would now first pass by the new store and the original store would lose his entire clientele. The Beis Yosef (Siman 156) does not follow this opinion but the Ramo (Darkei Moshe note 4) rules that the Ra’avyo is authoritative. In fact, the Rama used this Ra’avyo to issue a landmark ruling in an issue affecting all European Jewry.
That issue involved the publication of the Rambam’s Yad Hachazakah. The Maharam of Padua had recently published a corrected version of the Rambam. A non-Jew had a personal issue with the Maharam and decided to publish the Rambam as well and sell it at a cheaper price, effectively ruining the Maharam’s business since the Maharam could not compete with the wealthy goy who could afford to sell at a loss.
The Ramo (Responsa 10) ruled that no Jew was allowed to buy a copy of the gentile’s Rambam until the Maharam sold out all of the copies of the Rambam that he had printed. He gives three sources for his ruling. One is the previously cited Ra’avyo. The Ramo explains that the rationale of the Ra’avyo is that one may not engage in actions that will certainly damage his competition. Competition is permitted but not unfair competition. This is similar to laws nowadays forbidding dumping.
The Chasam Sofer (Choshen Mishpat) understands that the position of the Ra’avyo and Ramo is that one may not compete in a way that will destroy a rival’s livelihood even if nothing unfair is done. This is the general consensus of the poskim. Thus, the Maseis Binyomin (res 27), for example, ruled that one Jew may not turn to the local authorities to buy the right to import a product such as sugar when another Jew owns that right. The reason was that the government only granted the concession to one person and if one Jew would offer the government a better deal, he would effectively cause the first Jew to lose his livelihood.
This ruling that one may not open a business that will ruin his competition’s livelihood is the consensus of the poskim. Many of these poskim say that the source for this rule is the interpretation of Tosafos (Bava Basra 21B) of the Gemara which forbade a fisherman to spread his nets in the vicinity of another fisherman’s nets.
Rav Moshe Feinstein zatsal ruled this way as well. He ruled (Choshen Mishpot 2, 31) that one may not open a store to sell religious objects in a neighborhood that already had one such store in case there was only enough business to support one such store. He forced the second store to close. This was also the ruling of the Levushei Mordechai (Choshen Mishpot 12). He wrote, however, that if beis din forbids competition, beis din can also set the prices so that the clients will not suffer as a result of the lack of competition.
Rav Moshe in another response (Choshen Mishpot 1, 38) also followed this approach. He was asked to rule in a dispute between a local rebbe who supported himself from his shteibel. The rebbe was not popular with a group of his mispallelim who opened another shul a few blocks away from the rebbe. The rebbe argued that by opening a rival shul he would lose his livelihood.
Rav Moshe ruled in favor of the rebbe. The teshuvo is very interesting since the breakaway group had a number of strong arguments to justify their actions. One was that the rebbe cursed them and called them “communists”. Another was that they davened ashkenaz and the shteibel davened sefard. Rav Moshe brushed all these arguments aside with the argument that it is forbidden to compete in a manner that would cause the rebbe to lose his livelihood. There is another interesting din in this teshuvo. The other poskim do not discuss the amount of what is called a livelihood. Rav Moshe writes that it is what an average person of his stature earns.
The esrog business is a seasonal business and the people who engage in it on a retail level like yourself do not do it for their livelihood. Rather, it serves to supplement people’s income. Therefore, it would seem that you need not worry that you will force others to sell for cheaper than they have in the past as long as you play fair and don’t do anything to actively take away other people’s customers.