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The near-universal stance has been that monopolies are a natural byproduct of the free market, and not a "problem". There's a large subset (possibly the majori

The near-universal stance has been that monopolies are a natural byproduct of the free market, and not a "problem". There's a large subset (possibly the majority?) of libertarians who expect that monopolies are a byproduct of state intervention, and not a natural product of the free market, which is precisely why one shouldn't interfere in ways that lead to monopolies (among other ways). Are there examples of monopolies which didn't have state support?

guelo 15y ago
But libertarians that believe this believe it without evidence since there has never been an example of the ideal free market without government intervention the way libertarians imagine it. Edit: Maybe Somalia is an example, I remember a few years ago people touting the proliferation of Somalian cell phone companies. But the instability there doesn't seem like something we should try to emulate.
nhaehnle 15y ago
Are there examples of monopolies which didn't have state support? What about Microsoft and Facebook? Of course, it depends on your definition of monopoly - if you define it to be 100% market dominance, then almost by definition this is only possible using government intervention - but in the case of Microsoft, few people would seriously doubt that they have (or at least had) monopoly status. I don't see the state support that allowed them to get there. More generally, a free market greatly favors monopolies whenever there are network effects involved. Moreover, it is not only monopolies that are bad. Many markets "naturally" end up in the hands of only a few large corporations. This can sometimes (but not always) be as bad as a monopoly, e.g. electricity providers here in Germany. It is not clear to me what it is that makes some oligopolies problematic, while others (e.g. processor manufacturers) appear to be more benign.
- randallsquared 15y ago
  If a business has even 100% of a market because they're consistently cheaper/better than all contenders, they may be technically a monopoly, but they aren't one in the usual pernicious sense. I'll leave alone the third-rail topic of Microsoft, but Facebook is an interesting case because they only became prominent after the domination of their niche by MySpace, and yet now they're dominant. Was MySpace a monopoly? Well, in the Microsoft sense, yes, but not in the pre-1980-AT&T sense. Yet, as soon as a solution people preferred came along, they were no longer. Can a business get to 100% of a market, or nearly so, without state help? I think they often can. Can they hold that position in the face of better and/or cheaper startup competition, without state help? I think that's an open question, and I lean toward thinking that they can't. The other major question is so-called "natural monopolies", such as infrastructural service provision (phone, power, cable, etc). The fact that there are communities which have multiple competing firms in some of these seems to show that they aren't natural in the sense that they will arise unless prevented. While most communities in the US have a legislated monopoly on, for example, cable service, those that do not often have competing cable services, which is exactly what we are told won't happen. (My father lives in a place with three overlapping cable companies, as it happens, and he's tried all of them at one time or another). I've seen people in some of those communities who are arguing for a city-granted franchise switch seamlessly from arguing that regulation is needed to keep monopolies in check to arguing that such regulation is needed to prevent the wasteful laying of lines that duplicate existing lines. I guess that's neither here nor there, just a pet peeve. :) Anyway, searching on Rothbard and monopoly will turn up more rigorous arguments against the idea of free market monopolies than I've given here.

guelo 15y ago

But libertarians that believe this believe it without evidence since there has never been an example of the ideal free market without government intervention the way libertarians imagine it. Edit: Maybe Somalia is an example, I remember a few years ago people touting the proliferation of Somalian cell phone companies. But the instability there doesn't seem like something we should try to emulate.

nhaehnle 15y ago

Are there examples of monopolies which didn't have state support? What about Microsoft and Facebook? Of course, it depends on your definition of monopoly - if you define it to be 100% market dominance, then almost by definition this is only possible using government intervention - but in the case of Microsoft, few people would seriously doubt that they have (or at least had) monopoly status. I don't see the state support that allowed them to get there. More generally, a free market greatly favors monopolies whenever there are network effects involved. Moreover, it is not only monopolies that are bad. Many markets "naturally" end up in the hands of only a few large corporations. This can sometimes (but not always) be as bad as a monopoly, e.g. electricity providers here in Germany. It is not clear to me what it is that makes some oligopolies problematic, while others (e.g. processor manufacturers) appear to be more benign.

randallsquared 15y ago
If a business has even 100% of a market because they're consistently cheaper/better than all contenders, they may be technically a monopoly, but they aren't one in the usual pernicious sense. I'll leave alone the third-rail topic of Microsoft, but Facebook is an interesting case because they only became prominent after the domination of their niche by MySpace, and yet now they're dominant. Was MySpace a monopoly? Well, in the Microsoft sense, yes, but not in the pre-1980-AT&T sense. Yet, as soon as a solution people preferred came along, they were no longer. Can a business get to 100% of a market, or nearly so, without state help? I think they often can. Can they hold that position in the face of better and/or cheaper startup competition, without state help? I think that's an open question, and I lean toward thinking that they can't. The other major question is so-called "natural monopolies", such as infrastructural service provision (phone, power, cable, etc). The fact that there are communities which have multiple competing firms in some of these seems to show that they aren't natural in the sense that they will arise unless prevented. While most communities in the US have a legislated monopoly on, for example, cable service, those that do not often have competing cable services, which is exactly what we are told won't happen. (My father lives in a place with three overlapping cable companies, as it happens, and he's tried all of them at one time or another). I've seen people in some of those communities who are arguing for a city-granted franchise switch seamlessly from arguing that regulation is needed to keep monopolies in check to arguing that such regulation is needed to prevent the wasteful laying of lines that duplicate existing lines. I guess that's neither here nor there, just a pet peeve. :) Anyway, searching on Rothbard and monopoly will turn up more rigorous arguments against the idea of free market monopolies than I've given here.