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Argument against monopoly

Latest post Wed, Jul 2 2008 8:31 PM by Sage. 2 replies.
  • Tue, Jul 1 2008 5:59 PM

    • Sage
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    • Joined on Tue, Jan 22 2008
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    Argument against monopoly

    These are all the arguments I've compiled against monopolies.

    A - Incentives

    1 -  There is a separation of service and payment. Because monopolies are funded through taxation, they cannot go bankrupt - they can always get more funding from the public coffers. Therefore, monopolies have little incentive to be efficient.

    2 - Monopoly by definition means no competition. So, unsatisfied customers have nowhere else to take their business. Monopolies can treat their customers like scum and not lose any business. Again, they have little incentive for efficiency.

    3 - The actual incentives of monopolies are completely backwards compared with market incentives. On the market, efficient use of resources is rewarded with profits and inefficiency is punished with losses. But monopolies who do good business have their budgets reduced; and those who are inefficient are rewarde with an increased budget.

    Therefore, monopolies have strong incentives to be inefficient and strong disincentives to be efficient.

    B - Calculation

    1 - Because service is separated from payment, monopolies have no profit and loss mechanism. Thus, they have no way to rationally allocate resources.

    2 - Markets, on the other hand, do operate on the profit and loss system, and can rationally allocate resources.

    C - Morality

    1 - Monopolies must be enforced through initiatory violence.

    D - Inconsistency

    1 - What justification is there for group X to have a monopoly? Why not group Y?

    2 - What is the logical conclusion? Do we monopolize everything, or nothing? What justification is there for some monopoly and some competition?

     

    Does anyone have anything to add to this?


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  • Wed, Jul 2 2008 8:47 AM In reply to

    • fsk
    • Top 25 Contributor
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    Re: Argument against monopoly

    Sage:

    Does anyone have anything to add to this?

    The ultimate monopoly is government itself.  You have no choice to pay for government via taxes.  You can't fire the government and choose a different one.

    Once you have the ability to force your customers to buy your product, all sorts of other abuses become very easy.

     

    I have my own blog at FSK's Guide to Reality. Let me know if you like it.

    • Post Points: 20
  • Wed, Jul 2 2008 8:31 PM In reply to

    • Sage
    • Top 150 Contributor
    • Joined on Tue, Jan 22 2008
    • Posts 70
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    Re: Argument against monopoly

    Yeah, but government is just a concept for the various different monopolies - roads, health care, police, courts, money, etc.


    • Post Points: 5
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