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These are natural monopolies we're dealing with. There is nothing natural about a monopoly (or in this case, oligopoly) ordained by government. And that is th

by tc 17y ago

These are natural monopolies we're dealing with. There is nothing natural about a monopoly (or in this case, oligopoly) ordained by government. And that is the problem that should be addressed directly. Current government policies create an absurd amount of artificial spectrum scarcity. Edit: Obviously I wasn't clear here -- I should have been straightforward rather than going with a clever turn of phrase. I meant to say, as a point of accepted definition, that government-granted monopolies are not 'natural monopolies.' Natural monopolies are monopolies that occur 'naturally' in the market because of conditions or extreme capital requirements.

BrentRitterbeck 17y ago
"Natural monopoly" is an economics term. http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly
- tc 17y ago
  Please identify whether a "sweetheart municipal franchise agreement" is a "natural monopoly" or a "coercive monopoly." http://en.wikipedia.org/wiki/Coercive_monopoly http://en.wikipedia.org/wiki/Coercive_monopoly [Edited]
  - antonovka 17y ago
    Both. The first market entrant has "... an overwhelming cost advantage over other actual or potential competitors". Municipalities also have natural incentives to provide sweet-heart franchise agreements -- it's generally too expensive to do otherwise once the infrastructure is in place, often partially subsidized.
  - BrentRitterbeck 17y ago
    I didn't have to read the Wikipedia page. I linked to it for your benefit because you were degrading someone's comment when they were using a term that anyone with any exposure to economics would be familiar with.
    - tc 17y ago
      I don't want to quibble about this forever, but you're still missing my point. I said there wasn't anything natural about a government-granted monopoly because government-granted monopolies are not "natural monopolies" (in the academic economic sense of the phrase). I asked if you read the WP page because I felt that if you had, and had read my comment as well, that it would be clear to you that was my point.
      - BrentRitterbeck 17y ago
        You need to go read the section under Regulation. Often natural monopolies do arise in participation with the government.
        tc 17y ago
        The section you reference deals with regulation as a solution to mitigating the perceived harms of an existing natural monopoly.
        BrentRitterbeck 17y ago
        Yes, but they are allowed to continue to exist under government scrutiny. Most local utilities are set up this way. If you're the first there, you usually get to be the only supplier.
        tc 17y ago
        We're quibbling about terms, and I always fear at this point in a thread that the need to be right might overwhelm continued reading comprehension. But in economic parlance, if (let's say) a power company came to be a dominant monopoly in a given area without government support, that would be a natural monopoly. If the government then stepped in to regulate the power company as a utility and simultaneously excluded competitors by government force, the power company becomes a coercive monopoly. Is it still a natural monopoly? It's hard to say, because conditions change, but the government grant of exclusivity remains constant. Maybe a new technological innovation would have let a competitor emerge, breaking the natural monopoly. But we would never know as long as the government continued to exclude competitors by force of law. We may just be disagreeing to disagree at this point. I'll let you have the last word here.
antonovka 17y ago
There is nothing natural about a monopoly (or in this case, oligopoly) ordained by government. http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly And that is the problem that should be addressed directly. Current government policies create an absurd amount of artificial spectrum scarcity. Liberalizing spectrum allocation policy -- or opening the airwaves to anarchy -- wouldn't solve the problem that wireless telecoms is a very strong natural monopoly.
- tc 17y ago
  Monopoly? Last I checked there were multiple competing mobile carriers. You do have to put a lot of capital at risk though to be a national carrier. Which is exactly the point, really. Someone put a lot of capital at risk, and now that their bet has worked out, the regulators want to step in and tell them how to run their business and (in many cases) how much return is fair for them to get from their investment. Regulation of this sort is the same as partial nationalization, and has the same effect to a measured degree. When people anticipate that the returns on their winning bets will be 'moderated,' or that they will have to set business policies for the 'greater good,' they will in the future make less risky bets or put less capital at risk.
  - antonovka 17y ago
    Monopoly? Last I checked there were multiple competing mobile carriers. You do have to put a lot of capital at risk though to be a national carrier. Which is exactly the point, really. Someone put a lot of capital at risk, and now that their bet has worked out, the regulators want to step in and tell them how to run their business and (in many cases) how much return is fair for them to get from their investment. Natural monopoly. Not the same thing. The cellular industry has seen massive consolidation and reduction in consumer choice over the past 15 years -- the existing 5 national wireless carriers (AT&T, Verizon, Sprint, T-Mobile, U.S. Cellular) are comprised of literally hundreds (if not thousands) of formerly independent regional carriers. Cingular itself started as a conglomeration of 100+ regional carriers, before a few more mergers made Cingular into the new AT&T. This is not a particularly strong testament to consumer choice and competition in the face of a natural monopoly.

by tc 17y ago

BrentRitterbeck 17y ago

"Natural monopoly" is an economics term. http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly

tc 17y ago
Please identify whether a "sweetheart municipal franchise agreement" is a "natural monopoly" or a "coercive monopoly." http://en.wikipedia.org/wiki/Coercive_monopoly http://en.wikipedia.org/wiki/Coercive_monopoly [Edited]
- antonovka 17y ago
  Both. The first market entrant has "... an overwhelming cost advantage over other actual or potential competitors". Municipalities also have natural incentives to provide sweet-heart franchise agreements -- it's generally too expensive to do otherwise once the infrastructure is in place, often partially subsidized.
- BrentRitterbeck 17y ago
  I didn't have to read the Wikipedia page. I linked to it for your benefit because you were degrading someone's comment when they were using a term that anyone with any exposure to economics would be familiar with.
  - tc 17y ago
    I don't want to quibble about this forever, but you're still missing my point. I said there wasn't anything natural about a government-granted monopoly because government-granted monopolies are not "natural monopolies" (in the academic economic sense of the phrase). I asked if you read the WP page because I felt that if you had, and had read my comment as well, that it would be clear to you that was my point.
    - BrentRitterbeck 17y ago
      You need to go read the section under Regulation. Often natural monopolies do arise in participation with the government.
      - tc 17y ago
        The section you reference deals with regulation as a solution to mitigating the perceived harms of an existing natural monopoly.
        BrentRitterbeck 17y ago
        Yes, but they are allowed to continue to exist under government scrutiny. Most local utilities are set up this way. If you're the first there, you usually get to be the only supplier.
        tc 17y ago
        We're quibbling about terms, and I always fear at this point in a thread that the need to be right might overwhelm continued reading comprehension. But in economic parlance, if (let's say) a power company came to be a dominant monopoly in a given area without government support, that would be a natural monopoly. If the government then stepped in to regulate the power company as a utility and simultaneously excluded competitors by government force, the power company becomes a coercive monopoly. Is it still a natural monopoly? It's hard to say, because conditions change, but the government grant of exclusivity remains constant. Maybe a new technological innovation would have let a competitor emerge, breaking the natural monopoly. But we would never know as long as the government continued to exclude competitors by force of law. We may just be disagreeing to disagree at this point. I'll let you have the last word here.

antonovka 17y ago

There is nothing natural about a monopoly (or in this case, oligopoly) ordained by government. http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly And that is the problem that should be addressed directly. Current government policies create an absurd amount of artificial spectrum scarcity. Liberalizing spectrum allocation policy -- or opening the airwaves to anarchy -- wouldn't solve the problem that wireless telecoms is a very strong natural monopoly.

tc 17y ago
Monopoly? Last I checked there were multiple competing mobile carriers. You do have to put a lot of capital at risk though to be a national carrier. Which is exactly the point, really. Someone put a lot of capital at risk, and now that their bet has worked out, the regulators want to step in and tell them how to run their business and (in many cases) how much return is fair for them to get from their investment. Regulation of this sort is the same as partial nationalization, and has the same effect to a measured degree. When people anticipate that the returns on their winning bets will be 'moderated,' or that they will have to set business policies for the 'greater good,' they will in the future make less risky bets or put less capital at risk.
- antonovka 17y ago
  Monopoly? Last I checked there were multiple competing mobile carriers. You do have to put a lot of capital at risk though to be a national carrier. Which is exactly the point, really. Someone put a lot of capital at risk, and now that their bet has worked out, the regulators want to step in and tell them how to run their business and (in many cases) how much return is fair for them to get from their investment. Natural monopoly. Not the same thing. The cellular industry has seen massive consolidation and reduction in consumer choice over the past 15 years -- the existing 5 national wireless carriers (AT&T, Verizon, Sprint, T-Mobile, U.S. Cellular) are comprised of literally hundreds (if not thousands) of formerly independent regional carriers. Cingular itself started as a conglomeration of 100+ regional carriers, before a few more mergers made Cingular into the new AT&T. This is not a particularly strong testament to consumer choice and competition in the face of a natural monopoly.