One problem with monopoly we seem to have overlooked: do not the “big get bigger” and the “small get driven out” even if the market is left alone?
The answer is obvious empirically: historically, it has never happened. There is extensive literature by the better sort of economists on many historical examples where businesses were accused of forming “trusts”- that is, attempting to monopolize one industry through cartels.
Most cases, when State trustbusters were brought in to “break up” a large company, proved to have been instigated by smaller companies against a more efficient competitor.
[Cartels] tend to break up from market forces. The most efficient cartel member can outsell his fellow members and has a tremendous incentive to “cheat” on the cartel agreement. He can “steal” the customers from his fellow members and soon does, “under the table”. Upon discovery, his fellow cartel members fight back by cutting prices and the cartel disintegrates.
In a coerced market, however, the cartel will run to someone to force compliance with the cartel. That someone is, in any realistic unfree market, the State. [This is a] forced or State monopoly.
A monopoly occurs when one person or company controls an industry or is the only provider of a product or service. What is interesting to note is that everyone’s general disgust over monopolies seems to disappear when the greatest, most powerful, longest-lasting, and most abusive, violent, and murderous one is mentioned: the State itself. Governments have held monopolies over varied market systems throughout history but generally always hold a monopoly over the justice system and law enforcement. As the state grows, so does its monopoly- over healthcare, education, entrepreneurship, agriculture, technology, etc. Regardless of the number of participants in these markets- the big companies are always in bed with the government and their success is often ensured through subsidization and crippling regulations imposed on competitors.
My point in mentioning this is that the greatest perpetrator of monopolies on any aspect of our lives has always been the State. The state also enables the other great monopolies such as religions, banks, and corporations- even though these parties do not hold us at gunpoint, the State does and is on their side. If a corporation chose to force us at gunpoint to be customers, their nature would become State-like.
So, moving forward, we ask ourselves how can we ensure no one can control any aspect of our lives or the market? Certainly not through the government, the largest monopoly of them all.
In a free market there are no barriers to entering the market: success and a lasting business relies on market response. Do people want your product or service? Are they willing to pay for it as the price you are asking? Can you offer a low enough price and still profit enough that you see it worthwhile to continue? For a business to survive in a free market both participants- the consumer and the producer- must see some value in playing their part. They weigh the odds and decide that yes, they want to buy or sell the product/service. Thus, transactions occur and both people feel they have benefited from it.
However, we must remember that both people are interacting voluntarily. They each choose to participate. This can change. Not everyone who sees a successful business wishes to simply be their customer- some might wish to take their place! Without the means of government to either aid or prevent them from competing, an aspiring individual can open a business in competition. Their success will also be determined by the decision-making of the consumer. Which business offers better quality? Cheaper prices? Better customer service? Is closer to home? Is environmentally-friendly? Supports other local businesses? Any variant of factors can determine which business a consumer will choose to buy from; and it is up to the businesses to understand and meet those demands in order to stay in business.
If one grocery finds a farmer who will sell them the best and cheapest apples on the market- they will likely experience a period of being the top choice for consumers to buy apples from. Their profits will increase and their business will grow. But it is only a matter of time before other competing groceries find ways to match them on quality and price. Without intellectual property- this will inevitably occur in any market. Leaders in the market may naturally arise because they hold most of the customer base, but because of free and open competition, they will always be faced with competing prices and quality, forcing them to meet the consumer’s demands if they wish to remain the “biggest” out there. There is no way a business can legally “control” the market- they can only meet its needs most successfully. Who is meeting those needs the best is likely something to continually change over time.
So, in summary- monopolies as we know of them could not occur in a free market legally. No coercion can be applied directly or indirectly through lobbying by businesses and they can therefore not oust their competitors by any other means outside of voluntary market competition. Anything that could appear to be a monopoly would only be sustained by extremely competitive pricing and quality. And would only survive so long as the consumers continued to choose them over another option. Sometimes even the best quality and prices aren’t going to win over a community- I buy products at a local whole foods store over Publix or Wal-mart because I want to support localization, small business, organic products, and better my own health.
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