One of the best strategies for creating long-term competitive advantage is to use the profits from your early lead to do something that is expensive to replicate.

Here's an example close to my heart (and please note that I'm just a cog and this is not a statement on official strategy -- just my personal observation): In Google Chrome, we decided to do native beautiful polished UI on every platform - Windows, OS X, iOS, Android -- even Linux!! This is a very expensive way to build a piece of client-side software, and some might say the result is only a few percent better than what could be achieved using a cross-platform UI toolkit. But it's a very expensive couple percent to duplicate.

Same thing with multiprocess. Only makes the software a little bit better, but again, extremely difficult to replicate.

If you look closely, I believe you will see this strategy being used by the leaders of many industries that would at first glance appear to have low barriers to entry.

As an excercise - pick a random company out of fortune500, assume you have solid industry expertise (say - you've got a team of a couple of top guys who worked in that industry) in their area and also a couple million dollars, and think how likely you are to create a company that can compete with them. I'd say, that for a big fraction of fortune 500 (which is itself a large fraction of global economy), you need even more than the experise and a couple millions, which makes them fairly safe in their current positions.

I think there are few areas where the barriers you mention do not exist. I also mention the scenario where technological change renders monopolies irrelevant and address it by stating that smart winners spend a lot of time dealing with these threats.

"Absent large barriers to entry like economies of scale, network effects, or legal/regulatory hurdles"

Key supposition there. Because of the economic profits enabled by monopoly, corporations and individuals will disproportionately attempt to lodge themselves into niches where there are economies of scale, network effects, and legal/regulatory hurdles. Or lobby to legislate them, or create products that generate network effects and economies of scale.

Of course, not all markets are susceptible to any of those threats. But as a result they're open to competition, which quickly eliminates economic profit and makes companies occupying those niches much poorer and much less powerful.

Well, for one nothing lasts forever and there's no such thing as "the long run", so it's true that monopolies can't be sustainable. But the idea that they need a government to prop them up seems to lack a factual basis. De Beers seems to have lasted a pretty long time -- did they need the government in order to last as long as they have? Does the fact that they will collapse "eventually" (which, of course, all things must) make acceptable the massive rent that they've taken?

Power is power. As soon as one actor gets it in one domain, it spreads to another domain. Even if we had some completely laissez-faire economy in which there were no monopolies, as soon as one arose it would begin to get the laws changed to favor its persistence. It would then look as though it was government regulation that was propping it up, but the causal force was the monopolist, not the government.

The way to prevent this is to maximize the control of the people over the government, and make sure that no unaccountable-to-the-people entity gets too much power. I.e., the people must take an aggressive stance against rent-seeking monopolists in order to maximize competition, progress, and the overall growth of wealth.

how naive. were it not for government, in the end monopolies would just resort to threats of violence to achieve the same result. as distasteful (and perhaps inevitable) regulatory capture is, at least it provides a non-violent outlet to squash the competition... until the revolution that is.

Explain Google.