(March 14, 2010 at 11:25 am)Tiberius Wrote: I suspect any example I give will be rejected because it is "no longer a monopoly" or doesn't conform to your standard of what a monopoly is. I will say in advance that most, if not all monopolies these days do not exist as true "monopolies" anymore because of government intervention.
Two examples comes to mind. Dyson have had a monopoly on dual cyclone vacuum cleaners ever since they invented and patented the technology. They sell them for affordable prices, and their vacuum cleaners are more effective at picking up dust than bagged ones.
The other example of a good monopoly is almost kind of abstract. The Patenting System gives exclusive rights for the inventor of a technology to sell their invention for 20 years. The reason this is a good idea is that it encourages new development of technology. What is the point of a person spending hours of time, thousands of dollars, etc on developing a new technology if anyone can go and copy it and make a profit on it.
What about MS Windows? Sure, strictly speaking there is Mac, and other operating systems; but Windows holds something like 80% (or perhaps more) of the market. Yet I think Microsoft, like Dyson, has sufficient competition from other sources to prevent price gouging (unlike say AT&T b4 they were broken up, although one could argue the threat of government intervention was a deterrent, IMO the results speak for themselves and provide us with some empirical data). AT&T was a classical monopoly (both a vertical and horizontal monopoly). Since their break up the communications industry has had explosive growth, heated price competition, an explosion of new technology, etc. Obviously there's inherent limitations in relying on a single example to sell the idea that monopolies are bad - nonetheless it does give us at least some indication that monopolies like AT&T are generally a poor economic model.
