Hi,
Consider: a few people start out in a new field. At first everyone is doing pretty good and it is even possible for others to enter the field. But some of these people, through skill, luck, or sweat, do better than the others. Those that do drive the others out of business or acquire the other's business. Checked by government regulations, you might end up with three national auto manufacturers, or two major aerospace companies. Unchecked, the process will go to the monopolistic limit (although there might exist niches for small companies).
Once a monopoly is established, it has the ability to be self perpetuating. It has the resources to outlast the upstart competition in a loss war. It has the ability to block markets. And, when all else fails, it has the funds to buy the competition out, either peacefully or by leverage.
You mention pencils, soy sauce, and computer games. To some extent you're right, many companies produce each of these items. But look further up the food chain. I don't know about pencils, but almost all food product processors are owned (in the USA) by a small handful of companies like General Mills. And in spite of the large number of computer game start ups, the successful companies end up being owned by companies like Vivendi or 'merged' into companies like EA.
So, yes, other things being equal I think that monopolies are the inevitable end point of unregulated free markets.
--Pete
Quote:Pete, I'm somewhat baffled by this question. Are you implying that monopolies are the norm during unregulated competition?Basically, yes. There are many items, such as soft drinks, that avoid monopoly because of taste preferences. There are others where external factors such as shipping costs dominate. But the main reason that there are not more monopolies is government control.
Consider: a few people start out in a new field. At first everyone is doing pretty good and it is even possible for others to enter the field. But some of these people, through skill, luck, or sweat, do better than the others. Those that do drive the others out of business or acquire the other's business. Checked by government regulations, you might end up with three national auto manufacturers, or two major aerospace companies. Unchecked, the process will go to the monopolistic limit (although there might exist niches for small companies).
Once a monopoly is established, it has the ability to be self perpetuating. It has the resources to outlast the upstart competition in a loss war. It has the ability to block markets. And, when all else fails, it has the funds to buy the competition out, either peacefully or by leverage.
You mention pencils, soy sauce, and computer games. To some extent you're right, many companies produce each of these items. But look further up the food chain. I don't know about pencils, but almost all food product processors are owned (in the USA) by a small handful of companies like General Mills. And in spite of the large number of computer game start ups, the successful companies end up being owned by companies like Vivendi or 'merged' into companies like EA.
So, yes, other things being equal I think that monopolies are the inevitable end point of unregulated free markets.
--Pete
How big was the aquarium in Noah's ark?