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0 pointskortilla5y ago0 comments

> However, monopolies are an example of market failure

No they are not. It’s only considered a failure when the position is abused to prevent competition.

You can have a monopoly situation where competition just doesn’t bother to enter because the monopoly holder hasn’t abused the situation to make entering the market attractive.

Additionally, the government frequently grants monopolies because they don’t really want to see market competition due to the disruptive nature of the industry (e.g. utilities).

Monopolies are just a specific market condition that implies certain pricing dynamics and potential competitor strategies. They are not a failure in themselves and can frequently be a huge driver of competition. Nothing attracts a competitor like a stodgy monopoly with a thick margin and no penchant for innovation.

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5423542342355y ago

> You can have a monopoly situation where competition just doesn’t bother to enter because the monopoly holder hasn’t abused the situation to make entering the market attractive.

Do you have any real world examples of this actually happening?

> the government frequently grants monopolies because they don’t really want to see market competition due to the disruptive nature of the industry (e.g. utilities).

The government does this with the addition of heavy regulation specifically to prevent abuse that comes from having monopolistic control of a market.

kortillaOP5y ago

> Do you have any real world examples of this actually happening?

Drive into any small town. There is frequently only 1 gas station, 1 grocery store, etc that all sell things for reasonable prices.

For a completely different style, the major airport in Rome (da Vinci) is owned by a private company yet they don’t do any goofy shit to jack up landing fees.

There are many rural places in the US where there is only coverage from one cell phone provider and the rates remain the same.

> The government does this with the addition of heavy regulation specifically to prevent abuse that comes from having monopolistic control of a market.

No, they have to add the regulation because of the abuse that comes from a government granted monopoly. Monopolies emerge all of the time in all kinds of markets and they are not indications of failures. They can indicate that consumers are happy enough or that the margin is thin enough that competitors aren’t needed.

A government guaranteeing that a competitor can’t exist is when monopolies become ripe for abuse. That’s why government granted monopolies need regulation.

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