Monday, January 22, 2007

I favor free-market "monopolies"

What are monopolies that formed in a free market? Are they really "monopolies" in the true sense of the word? Gregory Bresiger tells us no (Part 1 and Part 2). Monopolies formed during in that system are not really monopolies.

Major businesses, like Microsoft or Wal-Mart, without government control will have to continue to be friendly to their customers in order for businesses to repeat their loyalty. If the major business wants to raise their prices too much for the same products, then other businesses will sprout up all around them and steal business with competitive prices, no matter how long or how settled the major business is. If a new business has a new, favorable product, or a new, favorable service, again they draw customers from the major business, and that business has to better itself in order to retain the market base. This concept is called free-enterprise.

However, state-controlled monopolies (the true monopolies) have the power of the state to make it illegal for other businesses which offer the same product or service for their customers to exist. Those customers have no choice but to accept what the monopoly gives to them. Unlike major businesses, monopolies don't have to compete with anybody. You tell me: what business offers better products and better services for lower prices?

Take it from my experience. I frequently go to Wal-Mart, and I use Microsoft Windows on my computer. Wal-Mart gives me lower prices than other retail stores, like Ventures, Kmart, or Target. I shop those other three when Wal-Mart doesn't have the product I'm looking for, or the product is better made or is lower in price than Wal-Mart, and I use these on occasion, but on average, I go to Wal-Mart more frequently. If Wal-Mart raises its prices, or lower its products, I, and many people, will switch to a different store. But, in real life, Ventures opened for business, then closed, and Kmart open in the same place, and then closed, while Wal-Mart moved to a bigger, better place in order to have more business.

However, I have one water company, one electric company, and one post office. I don't know if the price of this service is the best price I can get? If the businesses raise the prices, I either pay, or go without water, electricity, and first-class mail. If the bills go up, I pay a higher price, no ifs, ands, or buts. The government has price caps on services, but the best way is different companies to compete for my services. And one company charges lower prices, or better service, or both, than the others, that company will have a "monopoly". The free market is the best system to have.

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