One of the great things about capitalism is that it has some redundancy and resiliency. Competition may also lead to new features (markets), etc. On the other hand, this is duplicative and wasteful. Contrast the duplication (redundancy) of the capitalist system to the one producer model of communism. Less duplication but less resiliency and less ability to find new features (market). I think when a market is young and returns are high that it makes sense for many producers. However as a market matures, we can shed some of the duplication and allocate it to other new markets. If the monopolist restricts quantity sold? Easy, it increases the tears for a new entrant. The system manages itself in this way (in reality no system at all, it's decentralized coordination).
The problem with this idea of "duplication" is that, in reality, it's never been shown that monopolies are actually highly efficient. Humans just aren't very good at being efficient when they aren't forced to, and competition does that. The places where we do have monopolies that work out OK are where there's heavy government regulation, and even there the results are never as good as an industry where there's highly competitive private industry; it's just that, for some things, having a regulated monopoly is better than the alternative: we see this for utilities, subways, etc. where competition doesn't really make any sense or just isn't feasible (you can't really have 5 different subway lines going between the same 2 points in a dense city).
In reality, humans are frequently lazy, corrupt, incompetent, etc., and so in a market where there's healthy competition, the presence of competition provides a check against these problems, giving consumers an alternative when one player screws up too much. With a monopoly, there is no alternative, and no incentive to do better, unless it's being heavily controlled by the government which has to respond to voters.
