Economics: What a monopoly isn't.

[DBTrek]

Regulations can create monopolies, but “regulation” and “monopoly” aren’t synonyms. The FDA has numerous food regulations which do not create food monopolies. Local regulations, on the other hand, may very well create cable company monopolies. So I’m unsure what the purpose of your exercise is.

As for how are monopolies bad for the economy? As I mentioned before, market pricing allows for the most efficient distribution of resources. Monopoly pricing is not market pricing. Monopolies can charge more for a particular good or service than the market would dictate by virtue of being the sole provider. By over-pricing their goods, money that would have allocated resources elsewhere is lost to the monopoly’s coffers (aka spent inefficiently). That’s why they’re bad for an economy.

Market pricing, on the other hand, doesn’t benefit a capitalist who seeks the biggest returns on the smallest investments. Market pricing leads to competition, which leads to economic efficiency, which leads to industries being locked in a race to the lowest price and surviving on the smallest margins. Hard to capitalize much off that. Monopolies, on the other hand, are damn profitable, for people looking to maximize return on investment.

[SuburbanFarmer]

Regulations can create monopolies, but “regulation” and “monopoly” aren’t synonyms. The FDA has numerous food regulations which do not create food monopolies.

They do, though. A lot of food regulation is specifically geared towards raising the bar of entry to an impossible height.

[DBTrek]

Right. Regulations may create a monopoly, or they may not. They aren’t synonymous.

[jediuser598]

Regulations can create monopolies, but “regulation” and “monopoly” aren’t synonyms. The FDA has numerous food regulations which do not create food monopolies. Local regulations, on the other hand, may very well create cable company monopolies. So I’m unsure what the purpose of your exercise is.

As for how are monopolies bad for the economy? As I mentioned before, market pricing allows for the most efficient distribution of resources. Monopoly pricing is not market pricing. Monopolies can charge more for a particular good or service than the market would dictate by virtue of being the sole provider. By over-pricing their goods, money that would have allocated resources elsewhere is lost to the monopoly’s coffers (aka spent inefficiently). That’s why they’re bad for an economy.

Market pricing, on the other hand, doesn’t benefit a capitalist who seeks the biggest returns on the smallest investments. Market pricing leads to competition, which leads to economic efficiency, which leads to industries being locked in a race to the lowest price and surviving on the smallest margins. Hard to capitalize much off that. Monopolies, on the other hand, are damn profitable, for people looking to maximize return on investment.

When trying to tackle an issue, one tries to look at it as many ways as possible. A multi-faceted approach is better, yes?

You believe that monopolies are bad for the economy, I agree. What anti-trust measures are you for? Is your anti-trust approach always just "less regulation, less government interfering, smaller government. If the government gets involved then it can only lead to bad outcomes, a government should not be involved at all in any anti-trust activities"?

Should government be engaging in anti-trust activities?

[DBTrek]

If a business manages to establish a monopoly all on its lonesome, then the government may need to step in. But I have to ask - how is a business going to prevent competitors from arising? Or, in a global economy, how can they possibly own all of one resource?

[SuburbanFarmer]

If a business manages to establish a monopoly all on its lonesome, then the government may need to step in. But I have to ask - how is a business going to prevent competitors from arising? Or, in a global economy, how can they possibly own all of one resource?

Selling at a loss, until the competition goes out of business. This is enabled by an initial surge from innovation, allowing them to grow dominant, then government subsidies at the local, state, and federal level, because they're seen as "job creators". Finally, the banks love lending to big businesses, rather than small ones, and they're able to debt their way to monopoly.

Now we wind up with a bloated, inefficient, debt-riddled monstrosity standing over the corpses of ma'n'pa shops across the country. Walmart, McDonalds, Monsanto, etc.

[PartyOf5]

If a business manages to establish a monopoly all on its lonesome, then the government may need to step in. But I have to ask - how is a business going to prevent competitors from arising? Or, in a global economy, how can they possibly own all of one resource?

Selling at a loss, until the competition goes out of business. This is enabled by an initial surge from innovation, allowing them to grow dominant, then government subsidies at the local, state, and federal level, because they're seen as "job creators". Finally, the banks love lending to big businesses, rather than small ones, and they're able to debt their way to monopoly.

Now we wind up with a bloated, inefficient, debt-riddled monstrosity standing over the corpses of ma'n'pa shops across the country. Walmart, McDonalds, Monsanto, etc.

Walmart and McDonalds are not monopolies. I'm not familiar with Monsanto.

[jediuser598]

If a business manages to establish a monopoly all on its lonesome, then the government may need to step in. But I have to ask - how is a business going to prevent competitors from arising? Or, in a global economy, how can they possibly own all of one resource?

We disagree on the definition of monopoly.

If your definition of monopoly is "own all of one resource or service" then you make monopoly an impossible bar to reach (except initial monopolies from new products or ideas.) Even the government, by that definition, does not own a monopoly on violence.

Only about half of the violent crimes and a third of the property crimes that occur in the United States each year are reported to police. And most of the crimes that are reported don’t result in the arrest, charging and prosecution of a suspect, according to government statistics.

In 2015, the most recent year for which data are available, 47% of the violent crimes and 35% of the property crimes tracked by the Bureau of Justice Statistics were reported to police. Those figures come from an annual BJS survey of 90,000 households, which asks Americans ages 12 and older whether they were victims of a crime in the past six months and, if so, whether they reported that crime to law enforcement or not.

http://www.pewresearch.org/fact-tank/20 ... -unsolved/

So even the government doesn't have a 100% monopoly on violence. Far from it, according to these statistics. They just have enough.

[nmoore63]

McDonalds is nothing like a monopoly.

[DBTrek]

We disagree on the definition of monopoly.

If your definition of monopoly is "own all of one resource or service" then you make monopoly an impossible bar to reach (except initial monopolies from new products or ideas.) Even the government, by that definition, does not own a monopoly on violence.

That’s not how I define monopoly, but you disagree that if I control 100% of the iron on Earth that I have a monopoly on iron?

That’s weird.

It’s the only non-government assisted way I can think of where a business could create its own barrier to competition at the moment.