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Yes. Very interesting. The interesting part to me is that in terms of cost a monopolistic company might be the most effective. The problem is just that cost an
by nickik 10y ago
Yes. Very interesting.
The interesting part to me is that in terms of cost a monopolistic company might be the most effective. The problem is just that cost and price don't have much to do with each other. A monopoly provider is unlikely to actually provide low prices unless he knows competition could emerge.
Having two parallel infrastructure might be less efficent in terms of cost, but could still be more efficent in terms of prices to the consumer.
Both politicans and economist have argued that just having government step in could provide low cost and low price.
I think this assumtion is flawed. Having multible infastuctures adds layers of competition that even with government services or regulation are hard to achive. How well you utilise your infrastructre, what sort of payment structure are costumers provided with, quality of service, how for and in what direction do you grow your network and so on.
Government stepping in can maybe solve the short term problem, but if think about the long term, letting this market be free of a government regulated monopoly procides the chance that another company can come in, either starting in places where the monopoly has not reached and expand from there or start where the consumers hurt the most and try to expand from there.
I think the answer here is probebly differnt for every industry, laying a cable and a sewage system have very different cost structures.
The most important thing about these regulation seems to be that you never exclude competition explicitly. So you could regulate a infrastructure provider and give him price ceilings or something.