Mon, 22 Jun 2009

You want a monopoly!

You want to buy from a monopoly! Trust me on this one, and read on.

In the marketplace as everyone knows it today, monopolies are almost always bad. That's because they have a government-granted franchise which permits them to charge monopoly prices. When a monopoly has a franchise like that, they can restrict output, charge a higher price, and make more money. In a free market, without a franchise, anybody charging monopoly prices will soon have a competitor.

Okay, can you see it coming? A free-market monopoly, without a government franchise (like a license, or a copyright, or a patent), can only keep its monopoly by charging prices low enough to keep out competitors. Another way to say that is: a monopoly seller in a free market will always give you a better price than anybody else who might enter the market, otherwise ... they would.

Thus, you want to buy from a monopoly, but only if it's a free-market monopoly. And unfortunately, we've regulated them out of business. The only monopolies you'll see are charging monopoly prices, which they get away with because the government has given the monopoly in the first place.

A monopoly is a good thing, but only under conditions outside of our experience.

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