3 ms·

Charging for the right to run a natural monopoly is the ideal way to do it in my opinion, but only so with markets where there is a strict natural barrier to ma

Charging for the right to run a natural monopoly is the ideal way to do it in my opinion, but only so with markets where there is a strict natural barrier to market entry for parties other than the monopolist, which doesn't apply to utilities. It works with land, where if one person owns a plot of land, another person can't own it, which is why a land value tax is so efficient. With utilities, you could only charge for the right to run the monopoly if the government artificially prevents market entry, which is a bad idea IMHO, for all sorts of reasons. Better to have a public option, and a right by anyone to provide their own private option.

eru 3y ago
> With utilities, you could only charge for the right to run the monopoly if the government artificially prevents market entry, which is a bad idea IMHO, for all sorts of reasons. Better to have a public option, and a right by anyone to provide their own private option. You can have that right, and still auction off the right / obligation to run the public option.
- ETH_start 3y ago
  True, you could create a public option, subsidize it until achieves dominant network effects that makes the option the market standard, and then auction off the right to run it.
  - eru 3y ago
    Well, I'm assuming the public option already exists and is heavily regulated, and we are talking about how to improve on that situation. If there's no public option already existing, I wouldn't give any subsidies etc.
    - ETH_start 3y ago
      I'm advocating abolishing all regulations, including on those that prevent market entry by private actors, and then — if a public option doesn't already exist — subsidizing a public option until it attains dominant network effects.
      - eru 3y ago
        I'm in general in favour of cutting regulations down. Especially industry specific regulations. (Eg banking should be regulated the same way as manufacturing of shoes.) Yes, barriers to entry should be lowered, too. A particularly fruitful way to get more competition is to invite established foreign companies to set up shop locally. I don't understand why you would want to pick a winner, the 'public option' and subsidize it? We don't even know for sure whether the industry we are looking at is actually a 'natural monopoly' until such a monopoly develops. So I would leave them alone. However, when such a monopoly develops, then you _might_ (might!) want to break out regulations. (Basically whatever makes your 'public option' the 'public' option are the kinds of regulations you just might want to break out.) The biggest useful 'regulation' I can think of is one we already mentioned: auction off the natural monopoly.
        ETH_start 3y ago
        You would want to pick a winner because the winner in some sectors will be in a position to extract economic rent, and by having it in public hands, we can ensure it either chooses not to do that, or it extracts economic rent and uses the resources to further the public interest. And by picking the winner via subsidies, you can achieve this publicly aligned winner without regulatory restrictions on competition. Any regulatory restriction on private parties violates basic liberties and thus is not justifiable IMHO. It also is a slippery slope to very destructive regulatory barriers to entry instated at the behest of incumbents. An attempt to pick the winner via subsidies also might not succeed, because even with subsidies, the public option may fail to gain significant market share. And in that case, it's fortunate that the winner wasn't subject to regulatory restrictions regimenting its behavior, as a government that is too incompetent to create a market winner via subsidies is also likely to be too incompetent to do an effective job at designing the regulatory restrictions imposed on the market leader. In short, with subsidies, all that you are risking is the subsidies themselves, in the event that they're allocated to an incompetent organization. You're not risking undermining the entire industry with dysfunctional regulatory regimentation.
        eru 3y ago

eru 3y ago

> With utilities, you could only charge for the right to run the monopoly if the government artificially prevents market entry, which is a bad idea IMHO, for all sorts of reasons. Better to have a public option, and a right by anyone to provide their own private option. You can have that right, and still auction off the right / obligation to run the public option.

ETH_start 3y ago
True, you could create a public option, subsidize it until achieves dominant network effects that makes the option the market standard, and then auction off the right to run it.
- eru 3y ago
  Well, I'm assuming the public option already exists and is heavily regulated, and we are talking about how to improve on that situation. If there's no public option already existing, I wouldn't give any subsidies etc.
  - ETH_start 3y ago
    I'm advocating abolishing all regulations, including on those that prevent market entry by private actors, and then — if a public option doesn't already exist — subsidizing a public option until it attains dominant network effects.
    - eru 3y ago
      I'm in general in favour of cutting regulations down. Especially industry specific regulations. (Eg banking should be regulated the same way as manufacturing of shoes.) Yes, barriers to entry should be lowered, too. A particularly fruitful way to get more competition is to invite established foreign companies to set up shop locally. I don't understand why you would want to pick a winner, the 'public option' and subsidize it? We don't even know for sure whether the industry we are looking at is actually a 'natural monopoly' until such a monopoly develops. So I would leave them alone. However, when such a monopoly develops, then you _might_ (might!) want to break out regulations. (Basically whatever makes your 'public option' the 'public' option are the kinds of regulations you just might want to break out.) The biggest useful 'regulation' I can think of is one we already mentioned: auction off the natural monopoly.
      - ETH_start 3y ago
        You would want to pick a winner because the winner in some sectors will be in a position to extract economic rent, and by having it in public hands, we can ensure it either chooses not to do that, or it extracts economic rent and uses the resources to further the public interest. And by picking the winner via subsidies, you can achieve this publicly aligned winner without regulatory restrictions on competition. Any regulatory restriction on private parties violates basic liberties and thus is not justifiable IMHO. It also is a slippery slope to very destructive regulatory barriers to entry instated at the behest of incumbents. An attempt to pick the winner via subsidies also might not succeed, because even with subsidies, the public option may fail to gain significant market share. And in that case, it's fortunate that the winner wasn't subject to regulatory restrictions regimenting its behavior, as a government that is too incompetent to create a market winner via subsidies is also likely to be too incompetent to do an effective job at designing the regulatory restrictions imposed on the market leader. In short, with subsidies, all that you are risking is the subsidies themselves, in the event that they're allocated to an incompetent organization. You're not risking undermining the entire industry with dysfunctional regulatory regimentation.
        eru 3y ago