4 ms·
Do you have some examples? Any monopoly I know of was government granted, usually through regulations. I actually know of much more examples of disruption... N
by nickpp 6y ago
Do you have some examples? Any monopoly I know of was government granted, usually through regulations. I actually know of much more examples of disruption...
Now the market can arrive to a state of monopoly due to some powerful player, but as long as the startup mechanism is functioning, competition will arrive and disrupt.
- lumost 6y agoStandard Oil, US Steel, AT&T are the best known examples in the US. None of these (including AT&T) were government granted. They also share a few key traits 1) They dominated their "primary" markets 2) Their primary market was deep, and competing with them was cost prohibitive for any economic entity as in lose the GDP of a small country expensive.
- nickpp 6y agoOk, I can’t talk about the first two because, frankly, it’s been a while. But AT&T - you kidding me?! It was illegal to even bring your own phone device to their network! It was a classical example of government protected monopoly. A free market will break its own monopolies. A market corrupted by government regulation will need government intervention.
- lumost 6y agohttps://en.wikipedia.org/wiki/Kingsbury_Commitment https://en.wikipedia.org/wiki/Kingsbury_Commitment has a useful summary of the 5 attempts made by the government to curb AT&T's market power. With regards to it being illegal to connect to the phone system with your own device... this was a notion pushed by AT&T's legal, and operations teams. https://en.wikipedia.org/wiki/Carterfone https://en.wikipedia.org/wiki/Carterfone has some useful context on the regulatory decisions which compelled AT&T to allow third party devices on "their" network. Ultimately large monopolies contort the institutions, governments, and legal systems they are surrounded by. You wouldn't believe that a Trillion dollar corporation would argue for legislation that wasn't in their favor.
- nickpp 6y agoYeah, but it is the legislation that is preventing the competition and thus making them a monopoly, otherwise they would be disrupted by nimbler, faster startups of the day for which a monopolized market is an irresistible target (little competition and large profits).
- lumost 6y agoThis doesn't really work for natural monopolies, a small phone operator doesn't connect you to many people, a small steel mill doesn't have the economy of scale as a large mill, small oil operators couldn't build their own oil distribution.
- nickpp 6y agoI don't think those are actually natural monopolies. But there are ways to compete when you are small and you can't compete on the usuals (price, distribution, etc). It takes creativity though. I remember when the local telecom monopoly in my town held ski-high Internet prices, regular people started laying up Ethernet cables in the air between high-rises. A new ISP was born that way, who now has completely wiped out the original telecom. Of course though, there is now a regulation against doing that kind of thing...