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Natural monopolies are very often regulated because of the negative side effects of not doing so. Which is to say, market dominance has transformed products in
by jimmytidey 10y ago
Natural monopolies are very often regulated because of the negative side effects of not doing so.
Which is to say, market dominance has transformed products into utilities in the past.
You can argue that should not be the case, but, historically, it very much has been.
There's surely a balance to be struck between incentivising firms to innovate by allowing them to earn profits when they develop a good product and allowing a firms to lock-in economic rents forever.
How you strike that balance is a value judgement about the kind of society you want to live in.
- bogomipz 10y agoCan you give examples of the natural monopolies you are referring to?
- jimmytidey 10y agoMost classic utilities were at one point or another provided privately - water, telephones, electricity are examples. In each of these examples the delivery infrastructure makes them a natural monopoly. Almost any activity you can think of has been carried out by both the public and private sector in different societies (or the same one). In all industries, very dominant firms are likely to see action from the state.
- bzbarsky 10y agoYour electric company. Running two or more sets of power wires to every house so you can have competition on provision of electricity at the last-mile level doesn't really make sense.