A simple one today.
Are monopolies bad?
Good or bad is not the question - a libertarian would maintain that less regulations and gov’t interference would result in fewer monopolies.
Are monopolies bad?
Natural ones or ones caused by force or fraud?
~Matt
a libertarian would maintain that less regulations and gov’t interference would result in fewer monopolies.
Actually no I don’t think they would.
~Matt
Are monopolies bad?
Natural ones or ones caused by force or fraud?
~Matt
I wasn’t making any distinctions. If you want to make distinctions then feel free to answer the question twice.
both can be bad.
both can be good
Are monopolies bad?
Natural ones or ones caused by force or fraud?
~Matt
both can be bad.
both can be good
What determines when a monopoly is bad, and when it is good?
since we are going down this wishy-washy road - - god or bad for whom?
since we are going down this wishy-washy road - - god or bad for whom?
Good or bad for people in general. The ‘average joe’. The nation.
Monopolies are OBVIOUSLY good for the person or persons who own the company which holds the monopoly. But the numbers of those people are so small (by definition!) that they’re not worth discussing.
Are monopolies bad?
If sustained by force, then yes.
by ‘force’ do you mean market forces or gov’ment forces?
Monopolies are OBVIOUSLY good for the person or persons who own the company which holds the monopoly.
Not necessarily true. When monopolies become abusive, consumers seek alternative products which can completely eliminate the demand for the monopolized product and/or service – thereby wiping out the entire revenue stream for the monopolist.
Are monopolies bad?
If sustained by force, then yes.
Define ‘force’. Do hostile takeovers count?
Monopolies are OBVIOUSLY good for the person or persons who own the company which holds the monopoly.
Not necessarily true. When monopolies become abusive, consumers seek alternative products which can completely eliminate the demand for the monopolized product and/or service – thereby wiping out the entire revenue stream for the monopolist.
Can you give examples of this happening? It seems counterintuitive in that monopolies are most often found in sectors where consumers cannot easily find alternative products or services.
by ‘force’ do you mean market forces or gov’ment forces?
I mean physical force (violence) or the threat thereof. It is most commonly government force exercised through law, but it doesn’t have to be.
Market forces are different because they operate based upon the free exercise of voluntary exchange and respect for property rights.
First I think LorenzoP brings up a good point. “Good” and “Bad” are subjective positions.
For the purpose of my answer I will define “Good” as “What is best for the market”, which according to my belief is what is best for the individual. Thus “Bad” would be “Not good for the market” and thus according to my belief what is bad for the individual.
That said I don’t think you can answer the question without making the distinction.
A natural monopoly is one that is held under market conditions that is free of force or fraud. The only way a monopoly can exist under these conditions is by the natural monopoly supplying the market something the market feels is the best possible deal. Once these conditions change competition will step in thereby destroying the monopoly.
You can see natural monopolies of many types, although the larger ones tend to be highly regulated in our current system. Examples of natural monopolies might be a single bike store in a small town or a “Niche” shop in a large town or city, like a shop that sells a very specific clothing item or hobby item.
In cases like this there simply isn’t a “Large enough” market to support two of these stores. However in either case if the market feels they aren’t getting “There money’s worth” they might look to alternatives and that may lead to monopoly being broken, IOW the market is not captured in a natural monopoly.
This is entirely different than a monopoly held by force or fraud. To look at this type of monopoly one only has to look at certain aspects of modern unions or examples of large monopolistic companies in the late 1800’s.
The only way for such a monopoly to exist is to either perpetrate force or fraud, and or to have government back it up…which of course is force, despite it being “Legal force”.
So the short answer is “Natural monopolies” are fine, other monopolies, not fine.
~Matt
Postal service.
First I think LorenzoP brings up a good point. “Good” and “Bad” are subjective positions.
For the purpose of my answer I will define “Good” as “What is best for the market”, which according to my belief is what is best for the individual. Thus “Bad” would be “Not good for the market” and thus according to my belief what is bad for the individual.
OK, but WHICH individual are you talking about here? Clearly some individuals are going to benefit HUGELY from monopolies. Specifically, the owners. Some individuals are going to benefit to a lesser extent - for example those who sold their competing businesses to the fledgling monopoly. They made a one-time profit which could possibly be quite substantial.
Then there’s everyone else, who find themselves dealing with a sector in which there is no choice or competition. Clearly not as good. So ‘the individual’, when we’re talking in general terms, should probably be understood to be ‘everyone else’. We exclude the owner and the few one-time profiteers because the statistical chances of you or I being this person are quite low.
A natural monopoly is one that is held under market conditions that is free of force or fraud. The only way a monopoly can exist under these conditions is by the natural monopoly supplying the market something the market feels is the best possible deal. Once these conditions change competition will step in thereby destroying the monopoly.
Untrue. ‘Natural’ monopolies, once in place, can sustain themselves by using their considerable power within the market to stifle competition. Sometimes this means the Microsoft model where any new, interesting ‘threat’ to the monopoly is bought and either merged with their existing product suite, or simply shut down. Sometimes this means more aggressive attacks, such as signing exclusive deals with key suppliers, intended to cut off the lifeline of the competition before they grow large enough to be a real threat. There are many other ways for ‘natural’ monopolies to sustain themselves in the face of consumer opposition, while still operating completely within the law. Wal-Mart provides some great examples of this too. The whole concept of ‘loss leaders’, etc.
Usually, when monopolies are this big, there are ways for competitors to be small enough to escape notice or slip through the cracks. But typically the nature of the monopolized sector forces these small competitors to differentiate themselves somehow - usually by being very high-end or ‘boutique’ to the point where most people cannot afford them. They are not ‘real’ competition because they aren’t actually in the same sector. If the only bike shop in town is a huge mega-store selling every brand and convincing the reps of Trek, Specialized, Cervelo etc. to only deal with them, I can still open a boutique shop selling Time and Look. But 95% of the cycling public can’t afford Time or Look so I’m functionally irrelevant when we’re talking about whether or not there is actually still a monopoly. Sure, there are 2 bike stores in town now, but for most people that doesn’t matter.
So most ‘natural’ monopolies are not being held by force or fraud, but still have enough power to sustain themselves in the face of considerable consumer desire for alternatives. This doesn’t even touch on the idea of powerful marketing strategies which can shape consumer opinion to the point where consumers willingly pay far more for a far worse product than they would in a more diverse sector.
Can you give examples of this happening?
If a monopoly is held with enough force, I.E. US Postal Service as Wickedcheez mentioned then THERE IS NO ALTERNATIVE.
However also as pointed out if abused enough, unless of course that forced monopoly is held over a necessity to life, say food or water, people will just stop using the service all together as the product simply isn’t worth the cost.
It is illegal to send 1st class mail thru any other method that the USPS. If they simply decided to start charging 5$ a letter people would simply send less letters even if more modern methods, E-mail, fax, etc did not exist.
Examples of natural monopolies being abused and run out of business are all over the place. Just look around at the number of companies from small Mom & Pop places to medium size companies that came out with a locally unique or new product that became popular so they kept cramming the prices up.
People eventually say “Screw it, not worth it” and move on. Often times an alternative comes along and in many cases maybe that alternative isn’t any better, but simply cheaper, better service or something else. The original company fades away.
~Matt
Monopolies are OBVIOUSLY good for the person or persons who own the company which holds the monopoly.
Not necessarily true. When monopolies become abusive, consumers seek alternative products which can completely eliminate the demand for the monopolized product and/or service – thereby wiping out the entire revenue stream for the monopolist.
i want cable with internet but i dont like comcast please find another cable company i can use. oh wait i cant, there isnt one.
got any other arguments?