(March 13, 2010 at 5:16 am)Saerules Wrote: Say that a company has a monopoly upon the water market. They are the only company that can provide said resource, and they can choose to set the price however they want.Not true. What is stopping me from creating a company that also sells water?
Quote:They will thus attempt to maximize their profits... and they will sell only the worst "equal parts muck and water" to those in the worst financial situations (likely for prices that they will only be able to pay for by sacrificing their food, heating, shelter, property, etc), and the somewhat less 'dirty' (maybe toxins, maybe it runs in with the sewage, perhaps the water has become so overpriced that there is no longer an operating sewage for the middle-poor classes, thereby the smaller plumbing businesses have all been declared bankrupt) water is sold at exorbitant prices to the middle and poor classes... to the point where it may be simply more economical to drink the "mudwater" sold to the poorest of the poor.Your example, whilst quaint, does not happen in the real world. Why? Because as soon as quality goes down, price goes up, etc people start to notice, and complain. If the company doesn't sort out the problem, other companies will be set up to match the new demand for cleaner, cheaper, water.
To take a more realistic example, consider the monopoly on transporting goods in the 18th century in England. Back then, canals were used to transport goods, as barges could support heavy loads and transport items safely. The canal business monopolised because of this fact; everyone wanted their goods transported, and there was no better alternative. Then...the train was invented. If you want to stop a monopoly, do what they do, but better.
Quote:What... except that the one with the monopoly controls all of the market already, and can afford to buyout all of the shares of your upstart company?I don't know of many upstart companies that float on the stock market.
Quote:Or perhaps the monopoly has already struck exclusive deals with suppliers who are also monopolies... and the price to beat them out is beyond that which you can afford?Favouritism isn't an attribute of free market capitalism. The keyword here is "free".
Quote:There is simply no way a fresh upstart can compete with a monopoly... not unless they are both able to capable of supplying all the things the now former monopoly is capable of supplying and able to compete with their prices and connections.Ignoring the connections aspect since it is irrelevant (see above), you've mentioned previously that monopolies sell a low quality product for a high price. All a competitor needs to do then, is to sell the same quality product for a slightly lower price, and they've caused a problem for the monopoly company. Or, make a better quality product for the same price. Either way, if a lot of new businesses started doing this, you'd see a rapid change in the monopoly structure, as it tried to lower its prices or make a better product...both of which I can only see as good things.
Quote:Not to mention that if this is a truly free market... assassins and armies are services too...Evidently you don't know a thing about the free market. The free market is not above the laws of the country. If a monopoly paid an assassin to kill competitors, they would be committing a crime. Same if they created an army.
