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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: PMG who wrote (7029)	8/13/2001 10:35:55 AM
From: Don Lloyd	Read Replies (2) of 74559

PMG - >i>According to industrial economic theory there is one and only one economic condition where a monopoly adds more to welfare (w), defined as "producers' rent"(pr) + "consumers rent'"(cr). (I hope the English terms are correctly chosen or understandable). Ok, the economically optimal goal is: w=pr+cr -> max ... What makes this nonsense in the real world is that in general almost all consumers are also producers and investors as well. The proper use of competition is to determine which producer shall be the monopoly producer for a given product as it makes the most economizing use of available resources at available prices. The existence of a monopoly producer simply means that actual competition is restricted to the discouragement of production entry of potential competitors and responding to consumer price/demand preferences between all available products and services, not demanding an artificial production competition which ties up and consumes labor and other resources in futile and unprofitable efforts. All prices are ultimately determined by the consumer as he exercises his ability to choose what and how much, if any, of a given product or service to buy at what price. Every product or service whose price and total revenue are driven towards zero by artificial competition loses its ability to contribute to the economy by employing labor and producing profits and the resulting new investment. Regards, Don

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