Discuss:Economics, Business, Logistics:What is the problem of the monopoly?
From da Vinci Concept
Contents |
What is the problem of the monopoly?
sunny - Sat Jan 10 20:50:35 2004
I do not think that the economic monopoly in itself is evil or destructive and would like to acquire a better understanding of the concept of the monopoly and a critical assessment of its conceptual validity. I will openly acknowledge that the economic structure of some monopolies is capable of evil and destructive behavior, but do not have a basis for reasoning that it is the monopoly itself and not the politico-economic system(s) in which the monopoly exists that is the true problem. It is my thought that we impose policy and regulation upon some monopolistic structures that is only a patch upon a symptom (as are so many regulatory policies) and thus short-term solution that causes more economic harm than good.
Consumers, in general, will agree through their actions that the monopoly provides a good for them that is unarguable. This is logically apparent from the very sucess of the monopoly. Is this economic success a pre-requisite state for an economic structure to obtain the title of monopoly? I would argue that there are also both unsucessful monopolies and economically valid monopolies. The very pursuit of intellectual property is the pursuit of a monopoly state over a given market or economic signal.
. . .more later. . .
References: Paper concerning market signals by nobel laureate Michael Spence © 1973
--sunny Sat Jan 10 20:50:35 2004
charmed_quark - Sun Jan 11 8:39:45 2004
| Is this economic success a pre-requisite state for an economic structure to obtain the title of monopoly? |
| -- sunny |
Monopoly has little to do with quality of product or consumer choice. The pre-requisite for a monopoly is having a product with restricted distribution channels. Improvements in communication (Internet) and dirt cheap shipping costs have the potential to destroy monopolies in most areas. But where ever there is a limit on the distribution of a commodity (utilities, real estate) monopolies form. Some of these are government granted and regulated. Others (Microsoft, RIAA) will fail when the distribution model for their products changes.
You start to talk about IP monopolies. These are government granted, not economically developed (except in special cases, like the telephone, where the distribution model was part of the invention). Granting IP monopolies is a good idea, as long as governments are willing to review and revise the process when abuses become the norm.
--charmed_quark Sun Jan 11 8:39:45 2004
henrik - Sat Apr 17 2:44:51 2004
I won't address the question of whether monopolies are good or evil, since I believe that any organization is capable of doing both. However, I wanted to comment about the nature of a monopoly itself.
A colleague of mine and I were discussing the "applications" of abstract areas of mathematics to the "real world". Category theory is a relatively young branch of mathematics that spawned from algebraic topology and mathematical logic. He told me that he knew of a category theorist who was hired by a large company to help defend itself from accusations of being a monopoly.The category theorist along with a team of lawyers were apparently succesful at defending the company in court.
The basic idea is the following, sometimes finding a solution requires defining or redefining a category.
[Sunny, does this qualify as a 'solution template' ?]
We are likely to put the beverage coca-cola and the beverage pepsi in the same category.
However, we are unlikely to put a Boeing aircraft and a pepsi bottle in the same category. These are two fairly clear-cut cases.
It would be hard to argue that Pepsi has a monopoly on pepsi bottles and that we should let other companies make pepsi as well. We consider pepsi and coca-cola to be similar enough for them to be in the same category.
Similarly, if Pepsi were the only soft-drink provider or even worse the only beverage provider in existence, it would be hard to argue that Boeing is a competitor of Pepsi. It would be hard to convince someone that the products Boeing sells and the ones Pepsi sells are similar enough that the consumer has a choice between buying a Boeing 747 and half a liter of pepsi when he goes to the store.
However there is ground in between these two extremes.
Is the company Chartreuse a monopoly because it is the only company allowed to make Chartreuse verte, Chartreuse jaune and Chartreuse Cassis or anything roughly similar in flavor to these three items? Or is the company Chartreuse only one of many competitors in the general category of liquor?
The category theorist and the lawyers were able to convince the jury that the product over which the company was being accused of having a monopoly actually belonged to a larger more general category of items. And hence, the company had numerous competitors.
What can bother some people about this is that this almost sounds like cheating. It sounds like I could redefine everything so that I am always right. However, this is not really the case. Choosing to define a category in one way or in another should only come into question when we are in this middle ground where things are not as clear-cut.
--henrik Sat Apr 17 2:44:51 2004
TheLiberal Sat Sep 29 5:51:51 2007
Often you will find that there are many variables that determine whether an organization or structure is "beneficial" or not. Now, monopolies are useful, to a point, as they do indeed provide a service to a class of people. Monopolies are masers of creating massive stores of wealth, and to that extent they are good.
However.
Wealth is meant for people, thus the greatest amount of people possessing the greatest amount of wealth should be the ideal. The monopoly concentrates wealth in the hands of a select few, so while good, not as good as a structure that both creates wealth and distributes that wealth accordingly. The structure that does this most effectively? Competition.
When two companies compete(or more), the wealth is effectively distributed more efficiently among the general population in the form of wages. Education is the door to enter the workforce, and competition is the key to maintaining it.
--TheLiberal See above date.
