How does the free market handle monopolies?

[Salamando]

I'm still new to the completely free market idea.

[johnrocks]

http://www.jewishworldreview.com/cols/williams041200.asp start with this article. Government can play a vital role such as anti trust laws and other areas but our govt. regulations actually a lot of times create monopolies.

[Defining Obscene]

our govt. regulations actually a lot of times create monopolies.

Very true. A thing called "creative destruction" is just a fancy phrase for government protected monopoly. I can't really explain how a free market can handle a monopoly, because we don't handle monopolies, we usually have to deal with a handful of companies that control the market, which in my opinion is almost as bad as monopoly once they reach common ground.

- D.O.

[JoshLowry]

Yeah, Dr. Paul talks about it briefly in his Candidates@Google speach.

Here: http://www.youtube.com/watch?v=yCM_wQy4YVg

[Exponent]

...we usually have to deal with a handful of companies that control the market, which in my opinion is almost as bad as monopoly once they reach common ground..
Wikipedia: Oligopoly (http://en.wikipedia.org/wiki/Oligopoly)

[foofighter20x]

Free market monopolies hardly ever exist. They are the exception, not the rule.

[foofighter20x]

Very true. A thing called "creative destruction" is just a fancy phrase for government protected monopoly. I can't really explain how a free market can handle a monopoly, because we don't handle monopolies, we usually have to deal with a handful of companies that control the market, which in my opinion is almost as bad as monopoly once they reach common ground.

- D.O.

Free markets bust up monopolies pretty well. Herbert Dow is famous for it (http://www.ccsindia.org/ccsindia/lacs/24hervort_dow.pdf). :D

[Brandybuck]

True natural monopolies are very rare things, and when they do come about, tend to be very short lived.

The monopolies we see instead, are the direct or indirect creation of government. Either they have been given a grant, charter or privilege. But even here it's hard to maintain the monopoly without the additional use of government force.

An example is Microsoft. It gained its monopoly through the government grant of copyright. People say Microsoft is a natural monopoly, but without the artificial right of copyright, its monopoly could not exist. But wait! Even in the face of this, there's still Apple (desktop) and Sun (server). Or Linux or FreeBSD. And Firefox is taking a huge bite out of Internet Explorer's market.

Or for a more classic example, there's the railroad barons. How did they get their railroads? Through government grants of right-of-ways on which to build the railroads, and exclusive contracts with local municipalities to locate there. Rather like modern telco/cableco on a larger scale.

Monopolies are the boogeymen the statists always trot out to disparage the free market. Yet they're nearly always the creation of government.

[Kuldebar]

Some distinctions are discussed in this great interview with G. Edward Griffin (http://www.freedomforceinternational.org/) at a recent Ron Paul rally.

The discussion is about the meaning of words and how it relates to getting Ron Paul's message out in regards to a very loaded word: Capitalism

http://www.youtube.com/watch?v=W-Dhv59JYpA

[Salamando]

There were 2 monopolies I had in mind, Microsoft was one of them and I see your point there (I do believe consumers are getting smarter about operating system choices). What about the monopoly EA games has on the NFL game market? I don't know if it is technically a monopoly, but the NFL has given its license to EA exclusively to use their players. Now there is another game in the market this season but it isn't allowed to use NFL players (they happen to be using a new star retired players though) so I guess it really isn't a monopoly, but Madden has a huge advantage here.

[foofighter20x]

Brandybuck is correct.

However, free markets need intellectual property rights laws, otherwise there is no incentive to create new things, as you won't be able to profit from them for a limited time. Why invest the time, money and effort if everyone can copy it freely and you see no recoupment of the expenses you put into creating it?

[angrydragon]

The Ghost of John D. Rockefeller

http://independent.org/publications/article.asp?id=164

Good intro on economics. Ron Paul is in it.

http://video.google.com/videoplay?docid=-5658307639261829691