Quote Originally Posted by BananaStand View Post
The measures are not anti capitalist. When a utility company generates and delivers electricity for a profit....that's capitalism. And the government oversight is not anti-competitive. The nature of the business itself is anti-competitive. There's ultimately nothing preventing you outright from burning some fuel, boiling some water, spinning a turbine, generating energy, and then selling it. The real hurdle though, is delivering that energy. For that you need infrastructure, like power lines. The capital and red tape required to build an infrastructure that can deliver energy at a level competitive with the existing electric company is a massive, practically insurmountable barrier to entry.
You mentioned two ways monopolies develop, (1) fixed costs, (2) government regulation.

In practice, we have seen that government regulation is a remarkable deterrent to competition. The high fixed cost component, well, it's tough to say if the data show that it's much of a deterrent to competition. It's a deterrent to having a lot of competitors, but quantity of competitors doesn't equal competition. Some markets are highly competitive even with only two firms.

What government oversight does, is a countermeasure to this anti-competitive atmosphere. It doesn't allow the existing players to leverage large barriers to entry in a way that exploits the consumer.
What are these barriers to entry the firms are leveraging that aren't instead the government making them?

Here's how a firm with market power (the power to set market price, essentially a monopoly) can leverage in free market: it can set price where marginal cost equals demand whenever another firm tries to enter the market, thereby reducing the entering firm's incentive to enter. Then when the entering firm backs off, the monopoly can go back to setting the price where marginal cost equals marginal revenue, which is a higher price and lower quantity than the market demand would prefer while higher profits for the monopoly.

In theory, that is what can happen. In practice, it doesn't seem to have much of an effect on firm entry. Given my study of other elements of economics, it is my view that the monopoly model's deterrent on firm entry that I presented is flawed enough that it's near worthless. Firms are unlikely to want to enter a market based on current price/profits under a monopoly regime, and instead are likely to want to enter a market based on expected future price/profits in a market after the newly entered firm is established.

Perhaps the best example of all of the above is ISP. Incumbent ISPs are trying to use their market power to deter entry from companies like Google. It's not working. The only real active barriers to entry in the market are government regulations. Those barriers have been quite successful so far.