The Myth of Natural Monopoly (by Thomas DiLorenzo)

[Illyrien]

@AndroidPolitician

Unless there is a iron clad law saying that economics of scale leads naturally to monopolies in a free market, its an irrelevant criticism.

[vspqbd]

I will never understand people who use monopolies as a justification for government.

Government, by definition, is a monopoly on initiative violence within a geographical area.

Basically, it's just saying, "Monopolies are bad, therefore we need one with guns, and the power to imprison at will to prevent it."

So my finger is bleeding, therefore we need to chop it off? Not very sound advice.

Are the people making the monopoly argument of gov't doctors?

Not in my town I hope.

[moety2]

This was very informative and had excellent points breaking down natural monopoly. The sad thing is our system is set up with the assumption that competition is the prime motivator. Looking at our society today and all the results of competition and staying "competitive" one should consider trying a different model. Something crazy like cooperation.

[SuperBastiat]

VIVA LA LIBERTAD Y EL DIESTRO INTELECTUAL TOMAS DI LORENZO!

[AndroidPolitician]

So how exactly did companies like De Beers, Bell and Microsoft become monopolies?

[FletchforFreedom]

De Beers became a monopoly with state intervention (and still maintains monopoly agreements with multiple governments. Bell, likewise, gained monopoly power with agreements with the several states in exactly the way that gas companies did (as described directly in the video. Microsoft never met either the legal or economic definition of monopoly and there have always been multiple alternatives to MS products. Not one of your examples holds up.

[AndroidPolitician]

@FletchforFreedom

Microsoft owns 85% market share of operating systems....

What agreements did Bell go into and what "state intervention" helped De Beers?

And please don't cite the Kingsbury agreement as an example for Bell.

[FletchforFreedom]

Having a high market share does not make one a monopolist by either definition (it requires barriers to entry and/or harm to the consumer - neither of which existed). De Beers initially made agreements with the South African government (when consolidating claim ownership) and subsequently with other governments. And if you lack the intellectual capacity to google "Bell monopoly" or the "communications Act of 1934" the only ignorance you're exposing obviously isn't mine.

[AndroidPolitician]

@FletchforFreedom

Bell was a monopoly since (at least) 1913 (hence the Kingsbury Commitment), what regulations made Bell a monopoly?

Microsoft did take steps to prevent competition for things like Java, Apple etc. that's why the Justice department indicted it (Although the case went to target Internet Explorer, which literally solved nothing).

De Beers became a monopoly in 1887 (or 1888 depending on the source) which was due to a merger and before the agreements.

[FletchforFreedom]

Bell was initially a monopoly due to patents (a governmnet grant). Microsoft did not "prevent competition" with Java, et al - the issues were contractual disputes and were, in any case, not barriers to entry. And Microsoft was indicted because they didn't pay Caesar to stop it. De Beers initially consolidated claims in South Africa with government agreement that the property rights of other claimsholders (access) would not be enforced. The Army even protected them when ware broke out.

[AndroidPolitician]

@FletchforFreedom

I'm not a big fan of patents myself but blaming patents is the same as saying it was totally natural. The problem was, Bell would buy phone companies and refuse competitors access to it's phone network.

Microsoft did create direct barriers to entry. Whenever competitors like Apple or Netscape make software that could run on multiple OSes, Microsoft would try to bribe them with special deals that would of limited them from developing software for other OSes.

[FletchforFreedom]

I rarely come across a comment as monumentally stupid as the suggestion that the governmental policy of patent issuance is the same thing as "totally natural" in the marketplace ... though I can't say I'm surprised at the source. None of the actions you describe by either bell or Microsoft constitute barriers to entry, nor is the policy of buying competitors either monopolistic nor sustainable as a market strategy in the absence of state intervention. Did you not watch the video?!?!?

[AndroidPolitician]

@FletchforFreedom

Christ this is pathetic. If you're going to criticize patents then you might as well criticize corporate personhood (which has a much greater effect). A corporation being a "legal person" isn't natural either but it's been the precedent since the 1800s so for our purposes patents and corporate personhood are "natrual".

(CONT.)

[FletchforFreedom]

What' pathetic is your pretense to any grasp of economics, history, law, etc. (dating back to the absurdities you presented on child labor and its end). I never endorsed corporate personhood, but it has NO effect whatsoever on the issue of monopoly, natural or otherwise.

[AndroidPolitician]

@FletchforFreedom

Man look at your reading comprehension, I never said you were, only that it's stupid to factor in patents without factoring in something 100 times more important (corporate personhood).

[FletchforFreedom]

Yes it is monumentally stupid to make the idiotic claim that, form a monopoly perspective, corporate personhood has ANY relavnce at all when, obviously, patent protections (which act as barries to others entering the same market obviously does).

My reading comprehension stands up just fine.

[AndroidPolitician]

@FletchforFreedom

Corporate personhood and limited liability is the reason why corporations can even continue to operate after they did something terrible.

If mangers could be sued for corporate decisions directly most corporations would hardly last a decade.

So basiclly:

"corporations existing > rare cases of monopoly"

[AndroidPolitician]

@FletchforFreedom

Yeah clearly, Bell acting like a corporate raider and denying competition is nothing like a monopoly. And Microsoft has an initial barrier to entry, most programs were/are written for Microsoft and porting them to other OSes is extremely expensive.

That aside, Microsoft specifically made Netscape's security vulnerable on Windows. It also re-wrote and promoted the windows version of Java and made deals with RealPlayer to only use windows java. (CONT........and)

[FletchforFreedom]

Clearly, as anyone with an IQ above that of gravel can grasp, buying up competition is not a bar to entry as it both is a voluntary act between the parties and actually encourages further entries into the marketplace (ensuring an additional market). Your Microsoft argument collapses with the fact that competing O/S's existed (again, market share is irrelevant, merely their existence. Because those systems existed, the deals that you discuss do not support your case at all.

[AndroidPolitician]

@FletchforFreedom

Bahaha a monopoly doesn't mean 100% market share, it means significant enough share that it dictates the rest of the market.

Since you missed what I said, Bell would either buy up competition or destroy it by disallowing it from using Bell's phone network. (both a significant market share and dictating the rest of the market).

And since you're suddenly pro-companies buying up other companies, then look at the effects of Bell controlling phones from the 60s to 80s.

[FletchforFreedom]

Actually, it means the ability to exclude others from the marketplace. Bell could not prevent other companies from creating their own networks (that Bell could not exclude them from) without state action to require that only one network existed (hence Kingsbury). Bell could only control phones from the 60s to the 80s due to governmnet regulations. It wasn't the split up of AT&T but the allowance of other networks (largely non-wire based) that revolutionized the market.

[AndroidPolitician]

@FletchforFreedom

lol but that's the thing, there was no state action. And even Western Union was allowed to exist so that contradicts Bell "excluding" other companies.

A monopoly is when one company dictates the rest of the market to a very high degree, there can be other companies but at the mercy of the main one.

[doughtymqan]

@AndroidPolitician You really have  an android like mind. Are you hot for obama too?

[AndroidPolitician]

@doughtymqan

No I'm pretty critical of Obama :/

[cabgt]

@AndroidPolitician It's funny how people complain about supossed private monopolies, but often fail to complain about the biggest of them all - GOVERNMENT! In Australia, most people who point out Monopolies or Duopolies fail to see how government regulations and "crony" capitalism, as oppose to free-market capitalism, have contributed to this. Even still, these companie are not intentionally limiting supply and/or increasing prices.

[AndroidPolitician]

@cabgt

Most governments aren't private.

At any rate, most regulations are there so people don't die on the job.

[Hashishin13]

@AndroidPolitician How do these regulations come about? Its just government claiming the pretige for pointing out the obvious. In a free market those who don't look out for their workers suffer from the lawsuits, government is superfluous.

[AndroidPolitician]

@Hashishin13

lol the only reason why people can sue for dying on the job is because of regulations which make things illegal.

Not just that, but regulations are the only things that kept standard oil and Bell (eventually) from being monopolies.

[Hashishin13]

@AndroidPolitician Those aren't regulations those are laws, which are a specific subset of rules in general. Laws come from governments, and regulations are a type of law which "regulates" specific actions to do with land and business use, ownership and practices. Regulations have nothing to do with the criminal laws.

Lastly under anarcho-capitalism there are still rules, just no laws or regulations. These rules are decided through voluntary contract.

[Hashishin13]

@AndroidPolitician Your comment about monopolies is just wrong, under a system of anarcho-capitalism monopolies don't exist. That is one of the rules. Sure there can be one company that entirely dominates a certain industry, but it doesn't have a monopoly because new companies are always allowed to start up. You might have been taught that this is still a monopoly, just the type called "natural monopoly". This is just wrong, as long as there is free entry then there are no monopolies.

[AndroidPolitician]

@Hashishin13

"under a system of anarcho-capitalism monopolies don't exist."

Lol neither do sustainable economies. In the 1700s, America had terrible crop problems and had high tariffs to keep foreign crops out because of these problems, had it not placed those tariffs, the US could be like Haiti right now.

Regulations are created through laws, that "voluntary contract" is one that favors corporations since I doubt millions of people will organize to create and hold regulations without laws

[SunBeamsan]

@AndroidPolitician

lol. Anarcho-Capitalism doesn't create "sustainable" economies? It funny how you're going as far back as the 1700's before "Capitalism" as defined today even existed. Tariffs are simply a monopoly tool to keep competition out. Had tariffs not been in place, people would have had cheaper food and not go hungry. Your Haiti example is completely senseless and lacks utter relevance.> "I doubt millions of people will organize to create and hold regulations without laws?" On what?

[AndroidPolitician]

@SunBeamsan

That's a pretty bad understanding of imports. If there was for example a major crop failure and a country had to rely on foreign crops it would not only be more expensive (transportation etc.) but the economy overall would be significantly worse because domestic industry (ie domestic crop farmers) are the people who invest in the economy while the imports would of been subsidizing a foreign country.

(cont.)

[AndroidPolitician]

@SunBeamsan

The reason we have regulations by law is to prevent the negative consequences from even happening.

Why bother having thousands of people organize every time and still have casualties from things like the Shirtwaist Factory fire when you can simply put in place laws to keep it from happening?

[SunBeamsan]

@AndroidPolitician "The reason we have regulations by law is to prevent the negative consequences from even happening" - Hows that working out for ya? .

You act as if "laws" have the ability to stop a magic bullet. Of course the triangle shirtwaist factory was a tragedy, but why wouldn't people organize on their own without political elites? It happens all the time. Society more often then not engage in voluntary contractual agreements between two parties seeking to benefit from each other.

[AndroidPolitician]

@SunBeamsan

"Hows that working out for ya?"

There are much less shirtwaist factory-like incidents than prior to the regulations last time I checked and no it certainly doesn't happen all the time although with the weakening of regulations for things like fracking it has been happening more often (which is to say like once every few years).

Because not abiding by them leads to serious problems and expediency? Businesses are also essentially unaccountable because of limited liability.

[SunBeamsan]

@AndroidPolitician "There are much less shirtwaist factory-like incidents than prior to the regulations last time I checked" - And what is this "checking" based on? You seem to be implying that it was common place,or more common that people burned in their place of work prior to "regulation."

"Because not abiding by them leads to serious problems and expediency?" - How did that work out with the recent BP Oil spill, or the Banking crisis? - The state serves corporations, not limit them.

[AndroidPolitician]

@SunBeamsan

I don't remember the exact name but industrial accidents per capita are significantly lower now and are would of been much higher had they been kept track of in the 1800s.

In both oil and banking, regulation has been scaled way back for decades. It's no coincidence that there was never a banking crisis from the 40s to the 70s (with similar diminished regulation for oil and fracking).

[SunBeamsan]

@AndroidPolitician I had no idea you could measure industrial accidents on a per capita basis through over a century. In any case, it is a historical fact, that the number one cause of unnatural death to humans is the state. In the last century alone over 100 million people were murdered at the hands of the state on an industrial scale. We keep being warned about these villians of yesteryear like Rockerfeller, and Vanderbuilt, but you never talk about how the state has killed more people.

[AndroidPolitician]

@SunBeamsan

Yeah by a repressive and undemocratic state maybe, last time I checked there aren't death squads and government induced famines in the US.

And like I said I don't remember the name but worker's injuries (and of course adjusted per capita) would of been much higher in the 1800s since the idea of basic worker safety was considered a radical notion.

[SunBeamsan]

@AndroidPolitician Except Wiemar Germany was a democracy when Adolf Hitler was elected by the overwhelming German majority. When you concentrate power, evil tends to gravitate towards it. And yes we may not have government induced famines and mass murder in the US, but thats only because its being exported to other countries. Such as Vietnam, Serbia, Iraq, and Afghanistan. Not to mention all of the puppet dictators the West has prompted up to oppress the third world and exploit  their resources.

[AndroidPolitician]

@SunBeamsan

Ugghhhh I really hate when people use Wiemar Germany as an example because Hitler never actually won the election (Hindenburg did then died) and the Nazis narrowly won parliament out of about a dozen parties.

The reason why Germany went to hell was because Hitler did various illegal actions to get legislation passed (ie arresting the opposition) and when he had enough power called a state of emergency, had Germany followed it's own laws it wouldn't of happened.

(CONT.)

[AndroidPolitician]

@SunBeamsan

All that aside, I assumed we were talking about domestic policy since we were comparing it to workplace incidents but regardless it's a false dichotomy.

There's no reason why businesses shouldn't be regulated to ensure workplace safety because governments kill people.

[SunBeamsan]

@AndroidPolitician Theres no reason why business shouldnt regulated?So youre going to justify everything else the state has done for the sake of making the workplace "safer"? I think you need to learn how to sort out your priorities.The biggest economic and environmental catastrophys have been more frequent as the state grows. Be that the Great Depression, the recent one, Chernobyl, the BPoil spill, etc.Theres nothing in the 19th century you can point to that can even compare to what we see now.

[AndroidPolitician]

@SunBeamsan

The two issues aren't related, by making workplaces less safe your not making the state kill less people.

[SunBeamsan]

@AndroidPolitician They are related. In giving up your essential freedom for some "security", you submit and concede to it as a whole. If you don't understand this then i don't know we we're continuing this conversation. Societies can and have formed peaceful and voluntary agreements to settle disputes and lay down rules without the need for a tiny political elite running the system from top bottom.

[AndroidPolitician]

@SunBeamsan

Ok but state functions are not a monolithic whole and sometimes contradict. Just look at real welfare benefits (or AFDC/TANF) over the decades compared to military spending, there isn't enough room to increase both.

That would be true if we were talking about a democratic society but what you seem to be advocating is anarcho-capitalism.

[SunBeamsan]

@AndroidPolitician Oh i know the state has contradictory self opposing factions. The government is a tool for wealth extraction from one group of individuals to another, through force of arms. Be that the Teachers Unions, big Oil, politicians, the tobacco industry, the anti-tobacco industry, the military, or welfare lobby. It's just people using the big caveman's club of government to steal from each other a gun point. It really is a primitive and uncivilized social order based on coercion.

[AndroidPolitician]

@SunBeamsan

Yeah it would be totally impossible for humans to voluntarily extract wealth for greater needs in a stateless society oh wait no that's happened before in history.

What you're still advocating for is a magical anarcho-capitalism society which would not only be controlled through violence but is more difficult to emerge than the anarcho-syndicalist one I mentioned.

[SunBeamsan]

@AndroidPolitician "it would be totally impossible for humans to voluntarily extract wealth for greater needs"

I'm not sure what you mean by this? - I don't see how a market lacking state coercion = controlled through violence. You seem to have a fundamental misunderstanding on what both anarchy and free-market means. I see very little contradiction between Anarcho-Syndicalism and Anarcho-Capitalism. Both are according to ones ability, and according to ones needs.

[AndroidPolitician]

@SunBeamsan

I'm saying in a democratic stateless society people would collect wealth like unions do with dues and use that for societal needs and I'm also saying that in a non-democratic stateless society (anarcho-capitalism) there wouldn't be any rule of law because it's easier just to use coercion.

You seem to be sticking to the ideological view that in a anarcho-capitalist society people would actually abide by contracts and the rule of law when it's more lucrative not to.

[SunBeamsan]

@AndroidPolitician "Democratic"? Democracy is majoritarianism. Democracy means that 51% of the population can kill the other 49% simply because they're the majority, and majority rules. Democracy is a type of statism that too relies on force. A majority can extort and exploit a minority. > Democracy is complete coercion. > In Anarcho-Capitalism no individuals or groups would be allowed to monopolize power. In AnCap people would abide to contracts because their reputations depends on it to trade.

[AndroidPolitician]

@SunBeamsan

That would be true if you have an authoritarian attitude that people are evil and stupid and only try to coerce others when they have majority control. In reality, with a democratic stateless society it would mean there would be actual rule of law and policies people want whereas in anarcho-capitalism there would be violent coercion.

Just look at anarchist Spain if your unconvinced. 

[SunBeamsan]

@AndroidPolitician Well then I guess you've just made up your own definition of "democracy." Democracy means majority rule. Period. It is the majorities dictatorship over the minority. In Anarcho-Capitalism we would have self-organizing legal systems such as Lex mercatoria, or Merchants law. > Also, I know about Spain. They actually did turn to violence, they forcibly banned prostitution, the use of money, and even conducted terrorist attacks.

[AndroidPolitician]

@SunBeamsan

It means policy based on majority public opinion so unless you think the public at large is evil then yes it would be a great system.

Those "self-organizing legal systems" are pointless if someone with the biggest gun takes control of everyone else and since Lex mercatoria was always historically enforced by a state.

Uhh I hope you mean "violence" by defending themselves from Fascists and communists. (Cont.)

[Clyaton]

@AndroidPolitician 4 guys are in a room and the heater broke and it got cold. 1 man proposed that they take the clothes of the fat one, and split it among them to stay warm, they voted and it came 3-1 for taking his clothes. The fat man died of pneumonia. That's democracy, and IS dictatorship of a minority by a majority. America is NOT a democracy, it is a republic. Even in a republic the majority often tramples the minority such as in the drug war, but not as bad as pure democracy.

[AndroidPolitician]

@Clyaton

That would be democracy if the people in the room were sociopaths but assuming that people aren't evil and stupid, there would of been other solutions in your little hypothetical situation.

Plus democracy is not without inalienable rights just like a republic or whatever false dichotomy you use. People can't vote to take away other people's rights but they can vote on decisions that affect people collectively and don't involve rights.

[helltrackrider]

@AndroidPolitician

So...voting on decisions that affect people collectively and do not involve rights?...explain one situation where the outcome of the collective vote will not affect the individual.

Reminder ... in order to fund anything that "benefits" the collective; the individual must be removed of his property....also, in order to assure that the individual complies with the collective vote - that individual must be forced.

Anarchy is the only true freedom that can exist.

[AndroidPolitician]

@SunBeamsan

I know money was replaced by vouchers but I don't recall prostitution being banned. At any right it's 3 AM I'll be back later on.

[AndroidPolitician]

@FletchforFreedom

Microsoft intentionally weakened "middleware" programs on its system, bribed companies to only work for Microsoft and owns 85% of the marketshare and dictates the rest of the market.

That's a monopoly.

[FletchforFreedom]

It is not my fault that you continue to misuse the term monopoly. That they entered into free agrements for exclusivity with other companies is not a barrier to entry (which is what is necessary not some vague "dictation" of the market). And your continued repeating of the competely irrelevant 85% figure at this point merely demonstrates your inability to learn when your arguments have already bitten the dust.

[AndroidPolitician]

@FletchforFreedom

The only source I could find for your South Africa claim was Mises, and it's not specific whether or not it meant De Beers during present day South Africa or before the Boer Wars in Cape, Orange Free State etc.

At any rate, De Beers became a huge monopoly on it's own, the Cape colony etc. didn't give it exclusive rights, it just got big with a merger. The Diamond Cartel was the result of the South African government, not the monopoly.

[FletchforFreedom]

Mises is not the only source and it covers both the Mises era and the period of initial start-up (specifically the period when De Beers was consolidating claims ownership AT THE OUTSET) permiting it, with state help, to control 100% of the South African sources - and the Diamond Cartel was actually the result of the government in London and its monopoly further consolidated De Beers' hold - yet another govt intervention. You have yet to present an argument that doesn't collapse when examined.

[FletchforFreedom]

As South African historian Martin Meredith points out: “There was … no formal process in place for recording and preserving ownership rights…. [M]iners formed Diggers Committees to record and maintain ownership records … and mitigate disputes….”

“By 1885, Rhodes [who then controlled about 90% of the supply] was in the process of purchasing the few remaining claims on diamond land not yet under his control… but not everyone was eager to sell.... (cont.)

[FletchforFreedom]

...and some saw great potential in retaining the rights to their claims. In concert with local officials, Rhodes informed them that the local Diggers Committees were not government sanctioned bodies and that, if the remaining enterprises did not sell their interests, any claims only recorded with such groups would not be recognized.” Within two years, De Beers owned all the diamond mines in South Africa.

[AndroidPolitician]

@FletchforFreedom

Bahaha do you even read before you copy and paste? Here I'll give you a few hints:

- "[M]iners formed Diggers Committees to record and maintain ownership records … and mitigate disputes"

- "Rhodes informed them that the local Diggers Committees were not government sanctioned bodies"

But here's my favorite:

"By 1885, Rhodes [who then controlled about 90% of the supply]"

De Beers was a monopoly before you even tried to make you're non-existent point.

[FletchforFreedom]

Look, dimwit, you can;t seem to grasp the basic fact that MARKET SHARE DOES NOT DEFINE MONOPOLY. That De Beers had freely bought up some 90% of the South African claims (with the proceeds from adopting better technology initially) DID NOT MAKE THEM A MONOPOLY.

you are simply a complete fool. But, hey, thanks for playing!!

[AndroidPolitician]

@FletchforFreedom

Lol congrats on making up your own little definition of what a monopoly is to fit your austrian world view.

It's "when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it."

De Beers was a monopoly in 1885, Bell in 1913 and Microsoft now.

[Pdrum2]

If people naturally attain a "monopoly" the they can naturally lose it. If your definition of monopoly is having all the goods without controling the market, ok, but that's not the definition of monopoly.

[whoo689]

9 times out of 10, "natural" monopoly was GOVERNMENT granted or government-owned right from the beginning. Or is still gov't-owned. That should tell you a little bit about how "natural" it is. In a competitive free market, there'd be no natural monopolies. Competition is always preferable. The 'need' for a natural monopoly in ANY market is basicallky a bogus liberal excuse for bigger gov't and more regulation. They want me to believe natural monopoly has no DWL?

[Xasew]

Absolutely amazing!

[soccerlover1980]

Does this scientist truly want to tell us that natural monopolies do not exist? I don't no whether i want to laugh about this or to cry. Of course, they DO exist. Natural monopoly means that it lies in the "nature" of the average cost function (i.e. the subadditivity of average costs) that a certain industry develops towards a monopoly. It has been PROVEN in the economic history that this exists, and every sophisticated person knows how dangerous a natural monopoly can be.

[Nielsio]

I can only conclude that you didn't listen to the lecture.

[soccerlover1980]

Where do you conclude that from?

By the way - I am a German, maybe I did not understand everything.

However natural monopolies are a fact, and nobody can change my belief.

[Nielsio]

I guess there's no point in arguing then.

[asyabasya]

@soccerlover1980 "maybe I did not understand everything" and yet "natural monopolies are a fact" hello? don't u think your point was *a bit* contradictory? well, apparently it is your BELIEF in a natural monopoly, as u mentioned, rather that it's your KNOWLEDGE, since facts are supproted by knowledge, not belief

[RPFS2008]

@soccerlover1980

Name 5 natural monopolies then.

I'll give you 5 coercive government monopolies for every 1 natural monopoly you cite.

[alexpovel]

@soccerlover1980

Even if natural monopolies would be a fact then they would be destroyed in due time by a phenomenon known as 'creative destruction' (a theory by Joseph Schumpeter, I suggest you look it up).

(However if you are still not convinced after having read this I suggest you look at milton friedmans clip called monopoly and actually think about what is being said).

[FloodPower]

@soccerlover1980 Read his paper on it, that may help. It's relatively brief. Same title, pdf on mises.org

[Vessol]

@soccerlover1980

That's just being closed-minded. If I am presented the facts, I will change my mind on anything.

[libertyplayground]

@soccerlover1980 Except that there haven't ever been any natural monopolies - there haven't been any documented.

[viehe69]

@libertyplayground

Yeah, socialists love to talk about evil monopolies without providing evidence of even a single one that occurred and was maintained over time without government intervention.

[paulvahur]

@soccerlover1980 Why do you need to cry or laugh over something like that, it is not a matter of life or death. You should instead listen to the lecture and challenge the claims and evidence he brings out there. That is the way the science works. I do not understand how can somebody be married/emotionally attached to the theory of natural monopoly...

[guodade]

@soccerlover1980 “Natural monopolies” certainly do exist with certain resources such as metal ores, where one country has the vast bulk of the supply. This is what allows Australia and to some extent sub-Zambezian Africa to be so wealthy with so little innovation: they are rentier states that export minerals (aluminium, titanium, chrome) essential for modern technology which densely settled Eurasian and American nations do not possess owing to mountain building and glaciation destroying them.

[doughtymqan]

@soccerlover1980 Nonsense

[Hashishin13]

@soccerlove "natural monopoly" is just a way of saying that competition is unlikely to arise, as long as it isn't impossible for a new business to compete then the choice of the word monopoly is a poor one as competition is still possible. This is because, if a "natural monopoly", or a business that outcompetes all competitors, starts acting like a "true" monopoly, i.e. one granted a government priveledge, then eventually it's profits will break the "natural monopoly" and entice new competition.

[autonomy21]

of course they are a fact...Increasing returns to scale....

[whoo689]

I was always a little suspicious about the conventional wisdom among economists that there's a "natural monopoly." Seriously?? Pure bullshit. You can commercialize and make ANY field or industry competitive if you work hard enough at it. And the idea that you need one economy of scale rather than letting companies compete in order to "keep costs down" just sounds absurd to me. Why do economists throw competition's benefits out the window for these 'natural' monopolies?

[stealthswimmer]

it depends on how they're using the term "natural monopoly"

Some people literally mean a monopoly that somehow arises naturally. Other people mean a "technical monopoly" meaning a market such that only a single firm is the efficient outcome and does not make "economic profit" in equilibrium.

Definitely agreed though that innovations and cost cutting can create a competitive market. Things aren't just held still over time the way some folks seem to think.

[MachtzuSC]

Its sad that this only has 888 views and many people have seen this twice... I know I have, more people need to see this.

[mcduffiesteven]

Typical Dilo: Brilliant

[jaffijoe]

Renzo is the man, indeed.