When a Monopoly Is the Only Reasonable Situation in the Market?
I think the government controlled monopolies are not productively efficient, meaning, they are market failures. This is why governments set price ceilings in order to insure efficiency and prevent market failure. This also prevents the monopolist from setting a price so high, some consumers cannot or are not willing to pay. Therefore monopolies are a good thing in economics, or at least not a bad thing, so long as the monopoly price is maintained by voluntary transactions by both the buyer and the seller. However this does not apply to any monopoly issuing from the government. For example, the government of Latvia itself is by definition a monopoly of the legal use of aggressive violence, from which follow all its subsidiary monopolies of taxation and jurisdiction, both of which would be serious crimes for anyone else, and are only not crimes because the monopolist legalizes for themselves only, thus the government is a monopoly of crime. The government then makes more money by selling monopolies which it does in various ways, such as occupational licensing, and patents. These monopolies are not good for consumers because if they were, there would be no need for the monopoly. People would voluntarily prefer such services. The fact that they do not, proves irrefutably that they are not good for consumers, as judged by the consumers. The government is therefore itself the worst monopolist, and the source of all that is bad about monopolies.3
I strongly believe that monopoly could be the only reasonable situation in the market when there are no other good alternatives, and it is the only option for consumers. For example ‘Latvijas Gaze’ which is regulated by the government.
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- When a Monopoly Is the Only Reasonable Situation in the Market?
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