Quote Originally Posted by rong View Post
We'll not really. And central to this is that it's selling off existing Road networks as opposed to starting from scratch as I said in the post following the one you quoted.

But let's say there is a road between a and b. Let's say it's a trunk road connecting to towns or whatever. There are currently shittier routes through the country or though neighbourhoods or whatever but the big main road is considerably quicker.

The state sells the roads and company A gets this big one.

It is already big enough to handle all traffic as it stands with quiet times and very busy times.

Let's say the going rate in a competitive market is £5 per car. He charges £8 per car and due to the lack of real alternatives there is some reduction in demand due to car pooling and maybe people don't always make the journey they otherwise might have but there is enough demand still for it to be an optimal price.

If company b wants to enter that market, he's never getting that economic profit of £3 per car, because it ceases to exist once he enters. Now to compete it's not a case of a cost of £10k per day it's upfront investment of maybe £30 Mil (estimated cost to build one mile of motorway so probably a lot more but whatever) and then a cost of £10k per day (or whatever). Now the road that already exists could handle all the traffic that exists at competitive market prices anyway (the excess capacity I referred to earlier) so there isn't a need for another Road and the increase in supply would reduce prices further in the new competitive market.

So company b would need to be willing to invest a huge sum upfront (the entry barrier) when he knows the incumbent has the excess capacity which will force prices down as well as the financial muscle to enter a price war if required.

That's a perfect setup for a monopoly, surely?


My point was that (using your example, not mine) if the Would-Be Competitor's overhead is less than the estimated competitive market value of £5, then he could still enter, even though he won't get the additional £3. If you're claiming that by merely entering the market, he would lower the market value from £5 to even lower, that sort of invalidates idea of a £5 "competitive market value," doesn't it? This harks back to what I was saying about being careful with that term. If there is only one reasonable route between point A and point B, then necessarily that is a very valuable road. It isn't gouging to attempt to sell your product for as much as you can if its a legitimately invaluable product. The "monopolist" is well within his right to charge a high price, and a high price is a merely a problem for the market to solve.

There's only a monopoly if the incumbent is actively sabotaging alternatives from emerging. It is quite difficult to do this without the use of force or state influence, both of which are morally wrong and hopefully illegal.

And did your last line say the government would step in? Well ok glad we agree the government has some value, but I thought we didn't have one of them in your world.
I'm a realist. If there's a stateless world in our future, I'm sure it is hundreds or thousands of years away. I prefer to apply free-market sensibilities to expected reality. My personal opinion is that anti-monopoly laws do more harm than good, and that true monopolies are nearly impossible to form. I can safely assume that a minimally-corrupt state will squash anything that even comes remotely close to the type of monopoly you're imagining here, for better or worse.