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rp0x
11-11-2007, 04:34 PM
In most cases, the market is in control instead of it's participants. But, not in the case of a monopoly or oligopoly.

Case in point. The hold on oil by OPEC.
OPEC can pretty much control the price of oil. They can drive up the price of oil to $100. Well, the free market steps in and entreupeners invest in alternate energy. As soon as they have invested a lot of money, they can bring down the price of oil to $20 and drive all of them out of business. Rinse and repeat. Do that a few times, and entreupeners will stay away.

(NOTE: I am not talking about the market conditions now, the devaluation of dollar, peak oil etc. This is just a general example)

So, what does free market economists suggest in such a scenario ? Just let the single individual do whatever he wants ?

foofighter20x
11-11-2007, 04:39 PM
Monopolies by collusion only last as long as all the participants participate as agreed.

The minute one tries to undercut the rest to gain market share, the whole collusion thing falls apart.

Also, one only need to look at the story of Herbert Dow to see how easy it is for an outsider to bust up a monopoly in a free market.

dmspilot00
11-11-2007, 05:00 PM
From Milton Friedman's Free to Choose: "A monopoly can seldom be established within a country without overt and covert government assistance..."