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Pastimes : Austrian Economics, a lens on everyday reality -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (71)	12/14/2001 6:46:58 PM
From: Neocon	Read Replies (1) \| Respond to of 445

You are assuming two things that do not hold. First, you are assuming that the monopolist cannot be in a coercive position. That was the point of my two examples, using food and water. In essence, the monopolist is in a position to extort a high price by threatening to withhold essentials. It does no good to say that the person wants it enough to pay, unless you think that handing over your wallet to a mugger is a fair transaction. (After all, you wanted him to withdraw the threat, so isn't it a market transaction?) Second, you are assuming that the monopolist cannot have an adverse affect on the economy overall. I went to some trouble to show it was not necessarily so, and I don't want to be repetitive. The only way we can be sure that resources are allocated with relative efficiency is through competition. Otherwise, and even granting that there are limits, the monopolist may exploit his position to absorb an inordinate amount of disposable income. This hurts other businesses, which must sustain a narrower profit margin and do not have as much elasticity because they are more subject to competitive pressures. Also, the monopolist is not necessarily going to provide commensurate opportunity for employment or investment, assuming that the market is not likely to absorb much more of his goods and services. Finally, although you are right to point to the likelihood of new entrants when the return becomes attractive, as a balancing mechanism, to me that just means that the cure for the baneful effects of monopoly is for it to cease to be a monopoly. I doubt that the fear of new entrants will restrain the monopolist enough. Anyway, nice talking with you. I have to go, and may be off most of the weekend. If so, I will return on Monday......