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Friday, March 16, 2012


The Concise Guide To Economics

by Jim Cox


In the conventional positivist-based methodology found in today's textbooks, the term "monopoly" has been warped into any firm facing a falling demand curve.  Since all firms face a falling demand curve, the word "monopoly" has been rendered meaningless. The original concept of monopoly meant an exclusive privilege granted by the state, or literally one seller.  Even the textbooks acknowledge these as types or sources of monopoly. 
Some pertinent examples of monopoly, correctly understood, would include the postal monopoly (it is illegal for anyone else to deliver first class mail for under $3.00 per letter), most power companies and cable television companies (it is illegal for anyone else to sell these services in their territory--much like the Mafia turf concept!), taxis in many cities (it is illegal to run without an expensive medallion which the state limits in quantity), and public schools (which force property owners to pay for them regardless of patronage).
The irony of so many reformers who agonize over alleged monopolies generated in the free market is that they never complain of the hordes of government-created monopolies.  See for example Ralph Nader's The Monopoly Makers for a confirmation of this point.  One can only conclude that what so upsets these people is not monopolies but private property, businesses, and the free market. For surely the monopoly power the post office exercises on a daily basis and for decades now is far, far greater than any monopoly power a business may enjoy from voluntary consumer patronage.  No market-earned business monopoly (in the sense of one seller) can forcibly eliminate its competitors or forcibly require revenues from its customers the way the Post Office and other government-granted monopolies do as a matter of routine.

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