Question on Monopolies:

[Patriot123]

Got a question... In a true Libertarian society, would Monopolies be permitted to stay "in business?" Would the government be forbidden to get involved? What about, say, in a true American society; like what our founders envisioned. Would monopolies be permitted to "stay in business?" And would the government, again, be permitted to take action against a monopoly?

 

[pcosmar]

How would a monopoly come into existence without government assistance?

If no one wanted to compete in their field, or somehow no one was able to provide a better or alternate service/product then it could exist.

Then why should government be involved at all?

 

[Patriot123]

They could come into existence very easily, without government intervention... See, I was debating someone a while back about this. Their main argument was that over time, a monopoly would rule over an industry like we see today. Bigger corporations fight, and eventually only one remains, and at that point in time that corporation would have a monopoly over the industry and be able to essentially out do any small business that tried to compete. So basically, at that point, should a government be permitted to intervene? Or not? Their argument was simply that they absolutely should be as that monopoly is infringing on others rights to life as it is not permitting people to "buy from other businesses," and only giving them two options; buy from them or starve (assuming it was the food industry, of course)

 

[PeterWellington]

An earned monopoly (one obtained through competition in a free market) is nearly impossible to achieve. It implies both best product and best price, unlike state monopolies.

Still, it's theoretically possible and yes, they could start to screw consumers around once they completely controlled the market, but if they were doing it to any significant degree, new competition would emerge and begin to cut into their business.

In other words, market dynamics would control monopolies, not government.

 

[CuriousOnlooker]

In a free market, can a company with a monopoly create barriers to entry? If there is only one resource or set of resources available, isn't a "natural monopoly" formed?

One problem I have difficulty reconciling with a free market is that a free market also needs the public to be well informed. This cannot be the case really, most consumers often dont care (The opportunity cost of researching the best product as opposed to the one advertised the most is often offset by a snap decision). Also, where does property (i.e copyright infringement) come into play?

I suppose the answer to your question is really; a monopoly isn't necessarily a bad thing if it is providing the best service with the best use of resources. If they don't, a competitor will come in and take their place in the market. This supposes that the public are well informed.

 

[forsmant]

How do corporations fight? If you mean by being highly productive and efficient and good compensation to undercut the market of a less able corporation, therefore suppling a better product or service at a cheaper price until there are no competitors left, what is the problem?

 

[pcosmar]

They could come into existence very easily, without government intervention... See, I was debating someone a while back about this. Their main argument was that over time, a monopoly would rule over an industry like we see today. Bigger corporations fight, and eventually only one remains, and at that point in time that corporation would have a monopoly over the industry and be able to essentially out do any small business that tried to compete. So basically, at that point, should a government be permitted to intervene? Or not? Their argument was simply that they absolutely should be as that monopoly is infringing on others rights to life as it is not permitting people to "buy from other businesses," and only giving them two options; buy from them or starve (assuming it was the food industry, of course)

I would have to see this happen in a free market to believe it.
Right now there is NO free market, any example that you see is in the present system of government favor/prohibition.

The only way it could happen in a free market is if the company could provide a better service at the best price. If no one can compete with them successfully, they would have the monopoly. If they were to raise their price or provide poor service it would open the door to competition.

 

[PeterWellington]

Those of you who are concerned about monopolies, can you give some specific examples using a real product or service of what you fear might happen if it were monopolized?

 

[CuriousOnlooker]

Those of you who are concerned about monopolies, can you give some specific examples using a real product or service of what you fear might happen if it were monopolized?

US example; the oil barrens took control of the railways. They could then offer to buy smaller oil companies. If they refused, they refused to let the smaller oil companies use their railways (or racked up the fares to stupid amounts). Then they bought out those oil companies. The monopoly on the railways between certain areas brought them control; it set up a significant barrier for entry that could not be overcome.

 

[Mongoose470]

That is a good question:

Got a question... In a true Libertarian society, would Monopolies be permitted to stay "in business?" Would the government be forbidden to get involved? What about, say, in a true American society; like what our founders envisioned. Would monopolies be permitted to "stay in business?" And would the government, again, be permitted to take action against a monopoly?

I would like to expand your thought beyond monopolies to include oligopolies and monopolistic competition.

A libertarian would be against state established, state sponsored monopolies. We create monopolies, for instance, through patent laws, intellectual property agreements, etc. too many to list. Regulations go a long way to eliminating competition. The cab industry in New York is a great example.

 

[pcosmar]

US example; the oil barrens took control of the railways. They could then offer to buy smaller oil companies. If they refused, they refused to let the smaller oil companies use their railways (or racked up the fares to stupid amounts). Then they bought out those oil companies. The monopoly on the railways between certain areas brought them control; it set up a significant barrier for entry that could not be overcome.

Would you post some documentation/proof of that statement.
It seems to contradict this.
http://www.apachecorp.com/content/includes/Presentations/IAEE_20061012/pages/Slide03.html

What is an Independent Oil Company

An independent oil company is primarily involved in the exploration and production side of the oil and gas industry. They have little, if any, refining and marketing operations. Most independent oil and gas companies are small and privately held. Independents drill more wells and produce more oil and gas in the U.S. than the integrated oil companies.

also,
http://www.oilonline.com/key/independents.asp

 

[CuriousOnlooker]

Would you post some documentation/proof of that statement.
It seems to contradict this.
http://www.apachecorp.com/content/includes/Presentations/IAEE_20061012/pages/Slide03.html

also,
http://www.oilonline.com/key/independents.asp

Thanks for the reply. I seem to remember reading about it somewhere, when I have the time I'll look it up for you. Regardless, through establishing a monpoly (even a small one), you can set up strong barriers for entry to others, which inhibit a free market. Theinory.. Anyone got a good example? It's 00:45 here and tired ^_^

 

[Zolah]

Monopolies aren't necessarily a bad thing - if there is a monopoly of a company having the best product at the best price, that is a good thing for the consumer. In example of other monopolies, people have the ultimate power, if enough people don't like a company having a monopoly on a certain product, they look for the alternatives, and that drives prices down, which makes the monopoly (a) reduce prices (b) lose customers, both give less power to the company, this is the power of the people.

Government created monopolies and where competition is aggressively stopped is where the problem is.

 

[BillyDkid]

I would have to see this happen in a free market to believe it.
Right now there is NO free market, any example that you see is in the present system of government favor/prohibition.

The only way it could happen in a free market is if the company could provide a better service at the best price. If no one can compete with them successfully, they would have the monopoly. If they were to raise their price or provide poor service it would open the door to competition.

Governments invariably serve the interests of the powerful. The government regulation of the market is the reason why monopolies are formed. They put up the barriers to entry. Government official are lobbied continually to institute controls and regulation which favor existing corporations and inhibit competition. They will be disguised often as safety regulation or presented as job protection measures, but the effect and the purpose in invariably to favor those who already dominate an industry. Talk about fears of monopolies in a free market demonstrate a fundamental misunderstanding of the way the market works and shows how people have been brainwashed about how the economy actually works. It is in the interest of those companies who benefit from government interference to keep people in the dark and misinformed about these things. It is impossible for a company to form a monopoly in a genuinely free market in the sense that the word is used here. An inability to compete in terms of price and quality and appeal is completely different from being prevented from trying to compete by regulation or favoritism from the government. The market is self regulating and correcting, if only we will let it.

 

[PeterWellington]

US example; the oil barrens took control of the railways. They could then offer to buy smaller oil companies. If they refused, they refused to let the smaller oil companies use their railways (or racked up the fares to stupid amounts). Then they bought out those oil companies. The monopoly on the railways between certain areas brought them control; it set up a significant barrier for entry that could not be overcome.

What happened to oil prices during this time period?

 

[PeterWellington]

CuriousOnlooker,

Have you had a chance to look that up? Well, I'm kind of giving away the answer when I ask, if prices dropped significantly from the time Standard Oil was formed to the time it was broken up, then what is your complaint in this case?