Is Monopoly Good or Bad?

Monopoly is nearly always seen as something undesirable. Courts have wrestled with monopoly for ages, sometimes defining it as: "the power to control prices and exclude competition", "restraining trade", or "unfair and anti-competitive behavior." Should monopolistic practices be condemned and outlawed? Let's look at anti-competitive behavior and practices, but let's not confine ourselves to what's traditionally seen as monopoly.

The marriage contract is essentially a monopoly document. It represents a legally sanctioned collusive agreement between two parties to exclude competitors and restrain trade. It closes the market to competition, or at least it is supposed to. This collusion has benefits as well as costs. Because I have exclusive rights to her affections and property rights to a stream of highly valued domestic services, I place a higher value on my spouse, making me willing to share with her a greater percentage of my wealth. My spouse receives a comparable set of benefits from this collusive arrangement.

This monopolistic arrangement has a cost side and perhaps some inefficiencies as well. Neither one of us is as attentive as we were before we made our contractual arrangement. For my part, I don't open the car door for her as often, don't use breath fresheners and colognes as frequently, am not as nearly considerate and gentlemanly as before our marriage some 42 years earlier. The reason is simply that before marriage I was competing against other men and therefore could ill afford to act as a monopolist.

In order for one to condemn all monopolistic practices as evil, at least for consistency, he would have to also condemn marriage and the basic tenets of religion. I neither condemn marriage, the monopolistic tenets of religion, nor do I condemn business and labor union monopolies. The only moral argument that can be used to condemn and outlaw monopoly is when it is created through fraud, threats, intimidation and coercion.

Our nation has a number of government-sponsored, created or protected monopolies and collusions in restraint of trade. The government-owned monopoly and there are also numerous privately-owned monopolies and collusions in restraint of trade.

Thriving monopolistic agreements, at the federal level, are enforced by government agencies. The rule of thumb to determine whether an effective collusion exists is to see whether there are: mandated minimum prices, license to practice provisions and other restrictions on entry and finally whether there are techniques to enforce compliance among the colluding members - such as revocation of license or permit to practice, fines and imprisonment and other sanctions.

The free market, including free international trade, is the most effective protection against monopolistic abuses. In fact, in a free and open market, monopolistic companies can retain their monopoly power only if they do not fully exploit it; otherwise other companies will enter.

excerpts from:
Walter E. Williams
Ideas on Liberty