Are monopolies ever of benefit to consumers? - General

[QUOTE=J!NX;32594237]True, and if they did, you'd see a mass of alternatives popping up.[/QUOTE] There are a lot of alternatives anyway, see Onlive, Origin, D2D, etc

[QUOTE=DainBramageStudios;32594257]There are a lot of alternatives anyway, see Onlive, Origin, D2D, etc[/QUOTE] I mean, cheaper alternatives, rather

[QUOTE=J!NX;32594270]I mean, cheaper alternatives, rather[/QUOTE] they exist too

Monopolies affect other companies creating products, and means that the company with the monopoly would have to fill in that demand. In short, there'd either have to be a healthy non-monopolistic, competitive ecosystem, or one company with unlimited resources.

[QUOTE=Paravin;32587229]A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.[/QUOTE] Well I wouldn't call it a monopoly. There is other download sites like origins but the reason steam is the most popular isn't because its the only one out there but because it treats its customers the best. Oh and it was the first.

There are examples of private monopolies being positive for the consumer as well. A good example would be Standard Oil which drastically lowered prices of oil and kerosene to the consumer.

People are terrible confused, the issue with government monopolies is the lack of a profit incentive. They are not acceptable because of that, they are bad because of that. It creates a huge amount of inefficiency and activity that no sensible businessman would partake in. I can go into detail if needed, the best example of this is the continental railroad. But, there is this common theory of a large firm lowering the price to eliminate all its competition and then jacking up the prices and enjoying the profits with no competition. Even accepting the first premise, this really defies common sense, and the only reason why I believe it has become accept is because it has been repeated. The logic behind it is just irrational. [quote]The meddling Rudd has once again revealed his economic illiteracy by accusing supermarkets of predatory pricing. What is being asserted is that these companies will lower their prices until their competitors are driven out of business, at which point the supermarkets will charge monopoly prices for their goods. Yet those who make this charge are never able to provide evidence to support it — and that includes Rudd. And there's a good reason for that — there is no evidence. Everyone knows that when a company lowers the prices of its products demand will increase. If a company engages in predatory pricing then it will have to increase output to meet the additional demand. This means its costs of production will rise. The greater the demand, therefore, the great will be the company's additional costs. And the bigger the firm the greater will be its costs because of its larger investments in capital goods. In addition, as price is just one aspect of competition it would have to lower prices to a point that would overcome other competitive forces, adding even more to its losses. With respect to prices, it has been pointed out that there is no way to distinguish between a 'predatory' price and a competitive one. As one economist stated: . . .to attack as predation a policy that delivers goods to buyers at a low price may be to attack an honestly competitive price of a promotional sort. A policy to deprives buyers of the opportunity to purchase at lower prices today in the belief that protecting firms from the low prices of rivals today keeps more firms around "tomorrow", and that this assures buyers of lower prices to tomorrow, is wrongheaded. (Harold Demsetz, The Economics of the Business Firm, Cambridge University Press, 1997, p. 165). Another thing that is always overlooked is that any firm engaging in predatory prices endangers its other markets. It cannot raise prices in those markets to offset its price-cutting strategy because it would lose market share. Moreover, it might very well find that its lower prices will attract customers way from its other branches thereby raising even further the cost of its predatory-pricing strategy. This leads to the conclusion that localised price-cutting strategies are not sustainable. It's also argued that the "predatory" company uses its monopoly to builds up an arsenal of spare cash to fund its price-cutting war. But if the company is a "monopoly" then why does it need a predatory policy? Assuming that the company is big enough to accumulate large reserves then these reserves could only have come from profits. Meaning that if it is that efficient it has no need to engage in predatory pricing. In any case, this raises several points. As the company cannot know how long its competitors can hold out it cannot possibly know how long its reserves will last. (This uncertainty forms a serious obstacle to any policy of predatory pricing). As Demsetz explained: Pricing below cost to deter entry imposes great losses on the incumbent firm than on the would-be entrant, since the former loses much on its large market share while the latter loses practically. (Ibid. P. 165) Any company considering embarking on a course of price cutting knows that potential competitors need only wait for the company to raise its prices before they enter the market, which they can do at a discount by purchasing the bankrupted rivals' facilities*. This would put a severe damper on any temptation to raise prices above the level at which it had operated before implementing a predatory policy. Those who make allegations of "predatory" behaviour implicitly assume that once a firm becomes a huge concern its efficiency makes it invulnerable to competition. But if this is so, why does it need to be predatory? Every firm started small, and no firm — regardless of size — is immune to market forces. This is a fact that even recent economic history can attest to. One only has to think of IBM or David Jones, for instance, to see the truth of this. As Professor Coase pointed out, companies will continue to expand until the costs of doing so exceeds the benefits. Sabotaging this process will keep living standards lower than they would otherwise be. Supermarkets provide ample evidence of this fact: they introduced superior management and distribution techniques and technologies which cut costs and prices and offered an unprecedented and ever-growing range of goods and services, generating more employment (indirect as well as direct) and creating external economies from which we have all benefited. [url]www.brookesnews.com/081509supermarkets.html[/url][/quote] I can recommend some more in depth articles and lectures, I tried to pick a shorter article as this is a long post, but this whole notion has been debunked unless it can be confirmed that business trying to attain monopoly has an unlimited amount of money and can suffer the loses. But again, even assuming that a natural monopoly could be attained, the moment its consumers were unsatisfied, competitors would pop up. [QUOTE=markg06;32587872]Natural monopolies are fine but tend to be inefficient since managers and what not presumably realise they don't have to worry too much about profits since the government'll back them up.[/QUOTE] Government backing up a business is not at all a natural monopoly. [QUOTE=The Decoy;32589437]In a monopoly the company can charge whatever ridiculous price they want because there is no competition. So monopoly is bad and is at no benefit to the consumer.[/QUOTE] Isn't it common sense to assume that competition will arise when a firm charges prices the customers are not willing to pay. Or are we living in the fictitious world? [QUOTE=Callius;32589685]Barriers to entry[/quote] If it is a natural monopoly, sure, nobody can compete because the business currently providing that product does it far too well. Surely not a negative. If the business is not providing such a service, then what barrier is there to entry? Customers are not satisfied with the monopoly and a new business is offering a better product. What are they going to choose? [QUOTE=Callius;32589685]Sunk costs[/quote] This is self affirming in that you for some reason assume nobody can compete. Assume otherwise. [QUOTE=Callius;32589685]infrastructure[/quote] That's a disadvantage as it has to be paid for and maintained. In a world of reality where competition is possible, the monopolistic power that loses ground would be a large disadvantage with all the infrastructure it owns in that as its share of the market shrink, the maintenance bill remains the same, forcing the monopoly to sell part of its infrastructure, or to make less of a profit. [QUOTE=Callius;32589685]advertising[/quote] Advertising isn't something you have exclusive access to. Do you mean brand recognition or something? Or industry ties? [QUOTE=DainBramageStudios;32594165]woah woah what[/quote] All government monopolies are run terribly when compared to private businesses. There are examples that could be cited, such as the rail roads the government made back in the day, or how some people who have challenged the post office have actually been able to make a profit which the post office has not. But I can't have a discussion with a reaction. [QUOTE=DainBramageStudios;32594165]that's a hilariously shortsighted and/or naive way of thinking having a monopoly doesn't necessarily mean you got there by being a good business. look at DeBeers or United Fruit for fuck's sake[/quote] Yes, it is naive to think that people buy a product because they like it, and that they would refuse to purchase it if they didn't. I'm not sure what you're referencing, but I'm assuming it is something you assume has no value, and it's a rather bad point to make because as far as economics go, value is purely subjective. [QUOTE=DainBramageStudios;32594165]I don't think you understand how this works Although a lot of this isn't strictly a monopoly, this image is somewhat relevant:[/QUOTE] You aren't adding anything of value to this discussion.

[QUOTE=Pepin;32598603]People are terrible confused, the issue with government monopolies is the lack of a profit incentive.[/QUOTE] You understand that governments can give funding to different sectors of groups depending on how good they do so yes there is an incentive.

[QUOTE=Callius;32589685]Barriers to entry.[/quote] Strictly a government problem [QUOTE=Callius;32589685]Sunk costs[/quote] What? If you mean prices for cost are lower for a larger company, and that's reflected in their price and the new company can't make a cheaper product.... good? [QUOTE=Callius;32589685]infrastructure, advertising etc[/quote] People invest money to make money, this isn't really a barrier. [QUOTE=Callius;32589685]a new ISP doesn't have any of these. How do you set up an ISP when the owner of the fibre cables is your competator and won't rent/sell them to you?[/QUOTE] You build them yourself or find a new way to deliver access, unless of course there's some barrier stoping you at the governmental level. [QUOTE=Callius;32589685]A good example of a bad monopoly is Standard Oil [url]http://en.wikipedia.org/wiki/Standard_Oil[/url][/quote] Price of Kerosene went down from 30 cents/barrel to 6, horrible people. They were also never a monopoly. The Supreme Court broke up the Standard Oil holding company not because of being an actual monopoly, that's on public record and their share of the market had declined greatly for some years prior, but because they [i]intended[/i] to be a monopoly. Which is quite silly seeing as they never were one. [QUOTE=DainBramageStudios;32594165]woah woah what[/quote] Public monopolies are bad, did I fucking stutter? [QUOTE=DainBramageStudios;32594165]that's a hilariously shortsighted and/or naive way of thinking having a monopoly doesn't necessarily mean you got there by being a good business. look at DeBeers or United Fruit for fuck's sake[/quote] DeBeers is a de facto government monopoly because South Africa, the major center of world diamond production, nationalized all of the diamond mines. Anyone who finds a diamond mine on his property discovers that the mine immediately becomes government property. The South African government then licenses mine operators who lease the mines from the government and, it so happened, that the only licensees turned out to be DeBeers itself. Then later, Wikipedia admits: [quote]In 2000, the De Beers model changed,[19] due to factors such as the decision by producers in Russia, Canada and Australia, to distribute diamonds outside of the De Beers channel, thus effectively ending the monopoly.[6][18][/quote] While governments and regulators the world over were being bought off, the market crushed the monopoly. I don't think I even need to talk about United Fruit, I mean, come on. You can't come up with a subject a little more intellectually challenging? [QUOTE=DainBramageStudios;32594165]I don't think you understand how this works Although a lot of this isn't strictly a monopoly, this image is somewhat relevant: [t]http://filesmelt.com/dl/socialism1.png[/t][/QUOTE] I don't think [i]you[/i] understand how this works, you're supposed to make a point. Your image is fucking stupid. If you think that image is a legitimate argument, I could say something like: You're using a computer built by the market You're using a keyboard built by the market You're using a mouse built by the market You're using facepunch which was created thanks to the market Therefore you must agree with me you simple rube! Get the fuck over yourself. [editline]e[/editline] [QUOTE=imasillypiggy;32598706]You understand that governments can give funding to different sectors of groups depending on how good they do so yes there is an incentive.[/QUOTE] That isn't how government monopolies work, though. It depends what type of government monopoly you're talking about. I haven't seen any true nationalized monopoly get paid more because they've done good, or because they've produced anything of value in particular. It's all a political game playing on people's emotions and more often than not, sectors doing poorly are paid more. Look at Social Security, Education, Military. If you're talking about companies paid by the government, incentive is not all that matters. In fact this goes for both examples, what matters is a form of pricing. The price of the product produced is completely arbitrary, there's only one consumer. Waste is inevitable.

[QUOTE=s0beit;32598859] Look at Social Security,[/QUOTE] Actually social security is doing good with low abuse rates. Still sectors have to give results if they wish for funding meaning they still have to do good if they don't want that money going somewhere else.

[QUOTE=imasillypiggy;32599014]Actually social security is doing good with low abuse rates. Still sectors have to give results if they wish for funding meaning they still have to do good if they don't want that money going somewhere else.[/QUOTE] Social Security is doing far from "good", it's doing somewhere in between horrible and complete disaster. Also, Public sectors are completely politicized, it doesn't matter at all how they perform. Education = For the children, so only more money can be pumped into it. Social Security/Medicare/Medicaid = For the old people, so only more money can be pumped into it. Military = To protect us from Terrorizers, so only more money can be pumped into it. It's always about special interest groups, it's never about productivity.

[QUOTE=s0beit;32599083]Social Security is doing far from "good", it's doing somewhere in between horrible and complete disaster. [/QUOTE] Well yea I would expect that from someone against social security but I'm saying its actually not being abused/wasted all that bad. Sure when the government decides its going to spend a certain amount of money on the military they are going to do it but they make sure they people they are giving the money to is doing there job correctly or else they give it to another team with better results.

[QUOTE=s0beit;32598859] I don't think [i]you[/i] understand how this works, you're supposed to make a point. Your image is fucking stupid. If you think that image is a legitimate argument, I could say something like: You're using a computer built by the market You're using a keyboard built by the market You're using a mouse built by the market You're using facepunch which was created thanks to the market [/QUOTE] Are roads naturally occurring phenomenon?

[QUOTE=Sobotnik;32599130]Are roads naturally occurring phenomenon?[/QUOTE] How do you define "naturally occurring", if you mean do they sprout forth from the earth of their own volition, no. Thanks for framing the question like an asshole. If you mean would they be built otherwise, yes. The market can figure out supercomputers, space travel, mail delivery, dense steel but roads, come on bro, that's like, another level. [QUOTE=imasillypiggy;32599123]Well yea I would expect that from someone against social security but I'm saying its actually not being abused/wasted all that bad. Sure when the government decides its going to spend a certain amount of money on the military they are going to do it but they make sure they people they are giving the money to is doing there job correctly or else they give it to another team with better results.[/QUOTE] I don't think you understand how military funding works, the government doesn't even know what it's paying for. I'm being very serious, this isn't an attempt to be vague. They actually have no idea where the money is being spent. As for social security, it isn't about abuse, but it's certainly being wasted. If you define waste as running a gigantic deficit, which I do.

[QUOTE=Callius;32589685]It takes a person like that to get a business like that, you've got to be greedy enough to want more money and to put up with the enormous amount of effort you have to put in to run the whole company.[/QUOTE] That's not ALWAYS the case, but unfortunately it seems like that way. There's always a couple of good companies around (AMAZING companies even) who are in it because they're passionate about what they do and they're loved for it (Google, SpaceX, etc). But those ones are rare, unfortunately.

Oh look the libertarians have replied, who knew a monopoly in the free market could never harm it's customers, good heavens! the thought of it... no siree, see the second they gouge more cash the glorious free market will swoop in, as opposition somehow manage to raise enough capital and begin to manufacture. Everyone of course will flock to the new cheaper alternative! oh wait no, duopoly... rats

[QUOTE=Lonestriper;32603905]Oh look the libertarians have replied, who knew a monopoly in the free market could never harm it's customers, good heavens! the thought of it... no siree, see the second they gouge more cash the glorious free market will swoop in, as opposition somehow manage to raise enough capital and begin to manufacture. Everyone of course will flock to the new cheaper alternative! oh wait no, duopoly... rats[/QUOTE] So how you participate in debates is by making caricatures of straw men and then you up just bring up a word and assume there is some entire implied argument behind it? It is pretty obvious why you're doing that, and it is because you're incapable of making an argument. There is an obvious solution to this, and it is to either stay out of the debate, or to make your case.

[QUOTE=Paravin;32587229]A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.[/QUOTE] Steam isn't a monopoly.

monopolies are what ruin this country and they aggregate wealth to few individuals where as a mass of companies would distribute the wealth to a higher sum total of CEO, CFO's, managers, etc. best example is wal-mart. They've damn near monopolized grocery shopping and other useless shit that all use to be mom and pop stores where a man owned his company and kept his own. Now we're all dependent on some far off executive....

Yes, monopoly is justified in some cases. The best example I can think of are roads. I once drove through France, and I was shocked how inefficient their motorways were. They are owned by private companies, so you have to pay to travel on them, by sitting in a damn queue for miles every now and then until you reach the toll station. If the highway had been owned by the government you wouldn't need those toll stations, and it would increase the efficiency, accessability and speed of the highways.

[QUOTE=Ond kaja;32608448]The best example I can think of are roads. I once drove through France, and I was shocked how inefficient their motorways were. They are owned by private companies, so you have to pay to travel on them, by sitting in a damn queue for miles every now and then until you reach the toll station. [B]If the highway had been owned by the government you wouldn't need those toll stations, and it would increase the efficiency, accessability and speed of the highways.[/B][/QUOTE] Oh, so you're claiming that with government monopolization there would be free roads without tolls. First, that falls under the free lunch myth, someone always pays for it. In the case of government, they are likely to pay for many of their roads through taxes, so there goes that notion. I suppose you can make some claims about paying less through taxes if your income is low (or however the tax is decided), but that's a bad point make. In the case of roads funded without tolls, you are pay for them, but you may never you use them or see them. In the case of a toll fund road, you only pay for the road you want access to, which seems more fair. I could offer some comparison with this if you want, I can even offer a thought experiment. Certainly you can make the point that not as many roads would exist, but that would be a matter of efficiency, roads wouldn't be being built where they wouldn't be needed. The claims in the bold are pretty unfounded, especially considering many government highways require tolls and that many government high ways are inefficient. I can't quite talk of countries in Europe, but I can talk a good bit about the US. The toll system in the US for example did work pretty decent for high ways, but of course it did, there was high demand for it. The toll money was used to maintain the roads and it actually turned a profit. The issue came in where other departments started taking money from the high way tolls and this diverted much of the money into subway projects. As a result, the high ways are far less maintained and far less safe. I'm simplifying of course. I know you aren't from the US, but I'm sure you've heard that the US's infrastructure is crumbling and this is big reason why. What I'm suggest may seem to indicate that government toll roads could work if they just have a lock box, but I'd rather suggest that government doesn't work and the best lock box is privatization.

[QUOTE=sYnced;32607767]Steam isn't a monopoly.[/QUOTE] well all the gamestop/eb games nearby don't stock pc games anymore and best buy/future shop games always seem overpriced in comparison to Steam [editline]3rd October 2011[/editline] [QUOTE=s0beit;32598859] I don't think [i]you[/i] understand how this works, you're supposed to make a point. Your image is fucking stupid. If you think that image is a legitimate argument, I could say something like: You're using a computer built by the market You're using a keyboard built by the market You're using a mouse built by the market You're using facepunch which was created thanks to the market Therefore you must agree with me you simple rube! Get the fuck over yourself.[/QUOTE] dunno if that comparison is exactly the same since everything you listed is a luxury while the stuff in that image are stuff people depend on to live

[QUOTE=Paravin;32587229]A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.[/QUOTE] Steam has not monopolized the digital distribution industry. For example, EA's Origin platform is a strong competitor, among others.

[QUOTE=s0beit;32598859]Price of Kerosene went down from 30 cents/barrel to 6, horrible people. They were also never a monopoly. The Supreme Court broke up the Standard Oil holding company not because of being an actual monopoly, that's on public record and their share of the market had declined greatly for some years prior, but because they [i]intended[/i] to be a monopoly. Which is quite silly seeing as they never were one.[/QUOTE] Um they controled 88% of the oil flows in USA, 91% of production and 85% of final sales. I'd say that's a monopoly. [quote]"Rebates, preferences, and other discriminatory practices in favor of the combination by railroad companies; restraint and monopolization by control of pipe lines, and unfair practices against competing pipe lines; contracts with competitors in restraint of trade; unfair methods of competition, such as local price cutting at the points where necessary to suppress competition; [and] espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent."[/quote] [quote]Strictly a government problem[/quote] How? all business face barriers to entry? [quote]What? If you mean prices for cost are lower for a larger company, and that's reflected in their price and the new company can't make a cheaper product.... good?[/quote] Sunk costs are a type of barrier to entry, costs which can't be regained if the business flops and you try to pull out. [quote]People invest money to make money, this isn't really a barrier.[/quote] They are, look in an economics textbook. [quote]You build them yourself or find a new way to deliver access, unless of course there's some barrier stoping you at the governmental level.[/quote] Hey guys I'm going to make an ISP because comcast is crap. Oh wait it'll cost me 5 billion and take 2 years to put the cables in. That has nothing to do with goverments and is a massive barrier to entry for new businesses. Don't say "well get investment" because most large investors don't like lots of risk. [QUOTE=Pepin;32598603]If it is a natural monopoly, sure, nobody can compete because the business currently providing that product does it far too well. Surely not a negative. If the business is not providing such a service, then what barrier is there to entry? Customers are not satisfied with the monopoly and a new business is offering a better product. What are they going to choose?[/quote] I'm not sure what the legal definition of monopoly in USA is but in the UK it's over 25% market share. With a natural monopoly say you get 1000 unhappy customers, this is not a large enough customer base for it to be viable for someone to compete, leaving us with market failure as people can't get what they want. In addition to this there are non-monetary reasons why a company can't compete even if customers are unable, see the ISP example above [quote] This is self affirming in that you for some reason assume nobody can compete. Assume otherwise.[/quote] Assuming either way is wrong I'll agree but it's just as valid as assuming they can. [quote] That's a disadvantage as it has to be paid for and maintained. In a world of reality where competition is possible, the monopolistic power that loses ground would be a large disadvantage with all the infrastructure it owns in that as its share of the market shrink, the maintenance bill remains the same, forcing the monopoly to sell part of its infrastructure, or to make less of a profit.[/quote] Not all companys are profit maximisers, they may be revenue or sales maximisers and so not care as you said if competition is possible then a firm may be sales maximising for several years to destroy other companys i.e. predatory pricing. While you're right about having to maintain infrastructure the advantage of being able to deny any other firm the oppertunity to compete may overweigh it, of course this depends on the level of regulation and government intervention. [quote]Advertising isn't something you have exclusive access to. Do you mean brand recognition or something? Or industry ties?[/QUOTE] I meant brand recognition and the mentioned industry ties are another point I should have put. While standard Oil wasn't the best example of a consumer exploiting firm they did practice unfair business practices wiping out a lot of other companys and making people lose jobs. Arguably you can say this for the best of the market as people shouldn't compete unless they're economically and allocatively efficent however what happens when you have a monopoly in one market or another and the firms says "no we/our boss don't agree with your ethics (eg animal testing labs) and won't supply you electricity"? This is one reason why perfectly competative markets are something to strive for as you have many small competative firms offering similar but differentiated by non price factor products. [editline]3rd October 2011[/editline] [QUOTE=s0beit;32599083]Social Security is doing far from "good", it's doing somewhere in between horrible and complete disaster. Also, Public sectors are completely politicized, it doesn't matter at all how they perform. Education = For the children, so only more money can be pumped into it. Social Security/Medicare/Medicaid = For the old people, so only more money can be pumped into it. Military = To protect us from Terrorizers, so only more money can be pumped into it. It's always about special interest groups, it's never about productivity.[/QUOTE] That's because trying to provide these sectors privately is hard. How do you decide who pays for a public good like street lamps where anyone can 'enjoy' the use of it but no-one can be charged for it.

The only monopoly that I can think of that was beneficent to the consumer in the long run is microsoft. Their position on the market essentially gave them the ability to finally force some sort of hardware and software standards which more or less began bringing together an extremely fractured hardware market as hardware makers finally had to cater towards an existing system as opposed to pushing for their own. It's essentially thanks to microsoft that we are able to have so much compatibility these days. [QUOTE=sYnced;32607767]Steam isn't a monopoly.[/QUOTE] In the digital sales market? It's more or less a monopoly these days. A pretty strong one as well. Most of the other services are either tiny or fill a specific niche (like GoG). Steam is so powerful it's being used as a DRM method as well. Claiming it's not a monopoly would be downright silly.

[QUOTE=Paravin;32587229]A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.[/QUOTE] If Steam decided to jack us, there's Direct2Drive which has about the same selection possibly or you could just buy physical copies.

[QUOTE=Pepin;32608954]Oh, so you're claiming that with government monopolization there would be free roads without tolls. First, that falls under the free lunch myth, someone always pays for it. In the case of government, they are likely to pay for many of their roads through taxes, so there goes that notion. I suppose you can make some claims about paying less through taxes if your income is low (or however the tax is decided), but that's a bad point make.[/quote] I didn't even mention the word "free" in my post. I didn't even imply that travelling would be free, I just made the point that roads wouldn't be funded by tolls. This implies that they would instead be funded by taxes, doesn't it? Queueing for hours to pay a fee IS ineffective, but the companies owning the roads aren't affected by this, they still get their money. The travellers are forced to queue for miles because there aren't any other alternatives, especially if you're travelling a long distance. [quote]In the case of roads funded without tolls, you are pay for them, but you may never you use them or see them. In the case of a toll fund road, you only pay for the road you want access to, which seems more fair.[/quote]These roads are de facto monopolies since there aren't any alternatives (it's not like another company decides to build another road right beside their competitors). That means it's both ridiculously expensive and inconvenient to queue for hours at these toll stations, it increases the price of any products that are transported via these roads, and the quality of the roads isn't that good either. No, it's not fair for those who are forced to use these roads. [quote]I could offer some comparison with this if you want, I can even offer a thought experiment. Certainly you can make the point that not as many roads would exist, but that would be a matter of efficiency, roads wouldn't be being built where they wouldn't be needed.[/quote]Since so few roads would be built, the competition would therefore be non-existant, enabling the companies to charge much for travelling on the roads, while still not being required to provide any service beyond the essential. [quote] The claims in the bold are pretty unfounded, especially considering many government highways require tolls and that many government high ways are inefficient. I can't quite talk of countries in Europe, but I can talk a good bit about the US. The toll system in the US for example did work pretty decent for high ways, but of course it did, there was high demand for it. The toll money was used to maintain the roads and it actually turned a profit. The issue came in where other departments started taking money from the high way tolls and this diverted much of the money into subway projects. As a result, the high ways are far less maintained and far less safe. I'm simplifying of course. I know you aren't from the US, but I'm sure you've heard that the US's infrastructure is crumbling and this is big reason why. What I'm suggest may seem to indicate that government toll roads could work if they just have a lock box, but I'd rather suggest that government doesn't work and the best lock box is privatization.[/QUOTE]Uh, I won't defend the efficiency of the American government.

As european roads are concerned, while many have electronic tollbooths (trucks drive under them and get automatically billed) these aren't really in play for the majority of personal cars. These instead operate on yearly marks most of the time (varies a bit here and there). You can buy them almost anywhere and these give you the right to ride on the highways.

[QUOTE=Lambeth;32609640]dunno if that comparison is exactly the same since everything you listed is a luxury while the stuff in that image are stuff people depend on to live[/QUOTE] Well I would have mentioned food since you need that to survive, but you're posting here so you must be eating something. You'd be dead. [QUOTE=Callius;32610819]Um they controled 88% of the oil flows in USA, 91% of production and 85% of final sales. I'd say that's a monopoly.[/quote] Your definition of monopoly is pretty loose, but in any case it's a horrible example. How much did they control at the time of the trial? Isn't it [b]extremely[/b] clear that they have failed to monopolize the market if their market share steadily declined from their peak to the date of the trial? [QUOTE=Callius;32610819]How? all business face barriers to entry?[/quote] [QUOTE=Callius;32610819]Sunk costs are a type of barrier to entry, costs which can't be regained if the business flops and you try to pull out.[/quote] Larger already established firms taking in money can pay for the barriers to entry more easily than a new or smaller business. You do know that companies like Monsanto lobby for regulations to destroy any potential competition, don't you? Barriers to entry are not always necessarily bad, sometimes they're reality. Infrastructure is hard to build, but no more impossible to build than the original company [i]unless[/i] new barriers made by government exist. There are a [i]ton[/i] of regulations in building infrastructure. [QUOTE=Callius;32610819]They are, look in an economics textbook.[/quote] Yes but it isn't as big of a problem as you're making it. There are types of barriers to entry, this one falls under the "reality" category. People can't magically wish things into existence, bummer. I'm focusing more on the barriers that people can actually create. [QUOTE=Callius;32610819]Hey guys I'm going to make an ISP because comcast is crap. Oh wait it'll cost me 5 billion and take 2 years to put the cables in. That has nothing to do with goverments and is a massive barrier to entry for new businesses. Don't say "well get investment" because most large investors don't like lots of risk.[/quote] If there's a demand for it, and if there's a realistic possibility it will succeed people will invest in it. Many companies engage in activity where "sunk costs" are a factor. Many, many companies every single year. It also has [i]a lot[/i] to do with governments. Yeah, I'll just start putting up cables where ever I please, no licenses or contracts or anything. I'm sure the police will be cool with that. [QUOTE=Callius;32610819]I'm not sure what the legal definition of monopoly in USA is but in the UK it's over 25% market share. [/quote] That's fucking stupid. [QUOTE=Callius;32610819] Not all companys are profit maximisers, they may be revenue or sales maximisers and so not care as you said if competition is possible then a firm may be sales maximising for several years to destroy other companys i.e. predatory pricing. While you're right about having to maintain infrastructure the advantage of being able to deny any other firm the oppertunity to compete may overweigh it, of course this depends on the level of regulation and government intervention. [/quote] All companies are profit motivated. Predatory pricing is fine, it's actually arguable that it's a good thing. [quote]Critics of laws against predatory pricing may support their case empirically by arguing that there has been no instance where such a practice has actually led to a monopoly. Conversely, they argue that there is much evidence that predatory pricing has failed miserably. For example, Herbert Dow not only found a cheaper way to produce bromine but also defeated a predatory pricing attempt by the government-supported German cartel Bromkonvention, who objected to his selling in Germany at a lower price. Bromkonvention retaliated by flooding the US market with below-cost bromine, at an even lower price than Dow's. But Dow simply instructed his agents to buy up at the very low price, then sell it back in Germany at a profit but still lower than Bromkonvention's price. In the end, the cartel could not keep up selling below cost, and had to give in. [/quote] [QUOTE=Callius;32610819]While standard Oil wasn't the best example of a consumer exploiting firm they did practice unfair business practices wiping out a lot of other companys and making people lose jobs. Arguably you can say this for the best of the market as people shouldn't compete unless they're economically and allocatively efficent however what happens when you have a monopoly in one market or another and the firms says "no we/our boss don't agree with your ethics (eg animal testing labs) and won't supply you electricity"? This is one reason why perfectly competative markets are something to strive for as you have many small competative firms offering similar but differentiated by non price factor products.[/quote] Unfair business practices requires a definition of what is fair. The people driving to hang Standard Oil were the companies they were consuming, I'd say there's a conflict of interest there. The fact is the consumers benefited, and as Standard Oil attempted to monopolize they actually lost market share. They lost a lot of it between their peak and the trial. It isn't only "not the best example", it's a terrible example. While people like to complain about Standard Oil, people who consumed Kerosene benefited immensely and they failed miserably in actually gaining a monopoly.

I may be late to the party in this, but steam isn't technically a monopoly, as there are services such as Direct 2 drive and *sigh* origin. A true monopoly would be if there was no possible way for other companies to compete, such as an oil company drilling into all the oil wells in the world. And no, monopolies are NEVER a good thing for the consumer.