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 Originally Posted by wufwugy
The existence of a direct competitor is not a necessary condition for the market forces to be working. Indeed a market might function best with only one firm in it all the while market forces would be working.
Why doesn't the electric company just charge double? I answered this in two different ways on my post above yours and the one a couple days ago about roads and trains. There are a bunch of market forces in play if a monopoly doubles its price.
The typical effect of oversight by government is to reduce those market forces due to the unintended consequence of the oversight reducing profit expectations for potential entrants, increasing cost, and criminalizing innovation.
We're gonna talk in circles here wuf, but I think it's time we just agree that there is such a thing as....I don't know what you wanna call it......pick a word.....Imperfections.....Conflicts.....Undesirab le effects.....in a completely free and unregulated market.
In a completely free, unregulated market maybe 5 other electric companies would pop up, and the cost of electricity might go down as a result. Sure...fine. But what else happens? Do consumers really want five sets of power lines running along their streets? or if we're talking about trains....how many more instances of tracks crossing roads would there be? What does that do to commuter traffic?
Maybe consumers have decided that having ONE set of infrastructure is most desirable, and worth some nominal extra cost.
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