3 ms·

Please identify whether a "sweetheart municipal franchise agreement" is a "natural monopoly" or a "coercive monopoly." http://en.wikipedia.org/wiki/Coercive_mo

• 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
              But we would never know as long as the government enforced the coercive monopoly. This is a one-sided description and a false dichotomy. A non-regulated natural monopoly can be just as suppressive as a government enforced-coercive monopoly. A regulated natural monopoly does not also require the creation of a government-enforced coercive monopoly.
              • tc 17y ago