You make some interesting points but you contradict yourself, I think.
>>In an electric utility market, the capital requirements are so huge that entry is restricted to only a handful of companies.<<
is contradicted by
>> Beyond that are a host of decentralized alternatives, such as wind and solar power, which are now competitive, at least in places where there is an adequate supply of sunshine and wind.<<
I disagree with your assessment that natural monopolies do not exist in the free market. Of course they do - they evolve quite naturally. The "problem" is the maximum price that a natural monopoly can charge is higher than that which is necessary to cover costs and make a reasonable profit. Governments just hate to see that happen. More accurately, perhaps, consumers hate to see that happen, and turn to government for relief - - or maybe the government justs want a piece of the action. At any rate, in our country, we respond to natural monopolies with government regulation, not government ownership, at least not anymore.
The free market solution to a natural monopoly is technological innovation - if there is a dollar to be made, some genius will think of a way to make it. Consumers pay more in the short run, but in the long run, technology always triumphs. |
