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 Originally Posted by wufwugy
What economists call natural monopoly derives from two elements: (1) fixed costs, and (2) economies of scale.
Ok so I took the time to read this post and try to absorb it. The first point is very easy to understand. I was kind of hitting on this point without realising by referring to the infrastructure necessary to deliver an essential service.
The second point, I kind of get this. The more efficient a business is running, the easier it will be for it to outcompete its rivals.
Regulation also plays a part. The more regulated an industry, the less incentive there is to enter the market in the first place. The established and wealthier companies are better able to absorb the costs associated with regulations.
So ok I can see the point that nearly everything is monopolistic.
But soda isn't an essential service, and niether is Walmart or Amazon. If a company gains a monopoly in a genuinely competetive environment, then that's testament to their success. That's not really what my problem is. My problem is where companies are able to make profit off essential services where they have not earned that monopoly by outcompeting their rivals. They have bought that monopoly with money and influence; they won a government contract. That isn't free market capitalism, that's oligarchy.
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