Exempt certain companies from anti-monop[oly rules?

[Machjo]

Certain industries are naturally monopolistic (http://en.wikipedia.org/wiki/Natural_monopoly) owing to their being able to function more efficiently as monopolies than otherwise.

The problem of course is, efficiency aside, such an industry, if allowed to monopolize in a single company, also riskks becoming too powerful and thus able to exploit its monopoly status unjustly.

For a capitalist, this forces him into a catch-22. On the one hand, most capitalists are strongly in favour of competition, but allowing a company to monopolize would obviously eliminate all competition. On the other hand, the only way to avoid monopolization is for the government to intervene, which is anathema to the thinking of many capitalists. As a result of the complexities of this problem and the fact that a simple free market doesn't work well with such industries, some kind of government intervention is required. Various countries have various restrictions.

In some cases, a company is legally allowed to own up to a certain maximum percentage of that industry, and if it surpasses it, will be legally forced to sell off a part of itself. Other countries might have other alternative or additional restrictions. This can lead to other problems though too, such as preventing companies in that industry to become as efficient as possible seeing that a monopoly status is in fact natrually the most efficient system within that industry.

So how do we exploit the efficiencies of a natural monopoly while preventing the possible corruption that could accompany it?

Some have suggested government ownership of a monopoly. This way, it can stillmonopolize and exploit that natural advantage while still being under government control to prevent corruption. The problem though is that government, while efficient and redistributing wealth or creating opportunities for wealth creation, is generally not the most efficient creator of wealth itself, thus brigning to nought the efficiencies gained through monopolization.

One solution I could see to exploit the advantages of monopoly while avoiding the disadvantages would be to exempt consumers' co-ops from anti-monopoly laws, on the grounds that since they are owned by their consumers, they cannot exploit them unfailry, since the consumers themselves get to elect the board of directors.

Your thoughts on this?

Some

[Machjo]

Sorry for the typo in the title.

[eyeball]

Some have suggested government ownership of a monopoly. This way, it can stillmonopolize and exploit that natural advantage while still being under government control to prevent corruption. The problem though is that government, while efficient and redistributing wealth or creating opportunities for wealth creation, is generally not the most efficient creator of wealth itself, thus brigning to nought the efficiencies gained through monopolization.

Your thoughts on this?

I think the notion that governments can control corruption is misguided, to say the least. The government is the source of so much it almost has a monopoly on it.

[Machjo]

I think the notion that governments can control corruption is misguided, to say the least. The government is the source of so much it almost has a monopoly on it.

Partially agreed. Corruption can occur in government jsut as easily as in the private sector, or sometimes maybe even more easily owing to its access to various legislative powers.

[fellowtraveller]

There is some merit to having monopolies but perhaps the circumstances need to be regualtede carefully....

for example, it does not make much sense to run multiple sets of power lines or gas lines to individual homes, it just greatly increases the cost to consumers as those multiple investments will be passed directly to consumers on their monthly bills.

[Machjo]

But I honestly don't see how exempting a consumers' co-op from anti-competition laws would be harmful. After all, since a consumers' co-op is owned and controlled by its consumers, how could it exploit the consumers that own it even if it did become a monopoly?

I'd be curious as to your thoughts on whether consumers' co-ops ought to be exempt from anti-competition laws and be allowed to become a monopoly?

After all, worst case scenario, if it somehow found a way to exploit others unfairly for the benefit of its consumers, that's something any company could do regardless whether it's a monopoly, and the government could always restrain it too as a last resort. Personally, I'd feel quite comfortable with a consumers' co-op becoming a monopoly.

[eyeball]

One solution I could see to exploit the advantages of monopoly while avoiding the disadvantages would be to exempt consumers' co-ops from anti-monopoly laws, on the grounds that since they are owned by their consumers, they cannot exploit them unfailry, since the consumers themselves get to elect the board of directors.

Your thoughts on this?

Some

I'm a member of a consumer co-op and in my small town its definitely starting to look like a monopoly. It was just a grocery store in the beginning but now it seems every time a new small business opens up in town the co-op expands in the same direction. It's clearly starting to create problems for a few people.

The dividend cheques are nice but they're not so big that I can justify our becoming like another Wal-mart that drives other business' out. Most members are unlikely to vote against this development so I guess some sort of intervention might be in order.

[fellowtraveller]

But I honestly don't see how exempting a consumers' co-op from anti-competition laws would be harmful. After all, since a consumers' co-op is owned and controlled by its consumers, how could it exploit the consumers that own it even if it did become a monopoly?

Easily.

By denying any competitors access to a market, the consumer has no rein on it at all in terms of providing service or reasonabl;e cost for goods because nobody else is allowed in to provide an alternative service.

Overpay executive staff? Fine

Hire everybodys brother inlaw to bloated salaries? Fine

Fail to reinvest in technology? Fine.

Get sick of it all as a mandatory coop memeber and want to buy the service elsewhere? Nope, ypou must belong and you must pay whateever is asked.

I have no specific dislike of consumers coops, but they should have the same regulatory oversight as any other monopoly candidate.

[Machjo]

There is some merit to having monopolies but perhaps the circumstances need to be regualtede carefully....

for example, it does not make much sense to run multiple sets of power lines or gas lines to individual homes, it just greatly increases the cost to consumers as those multiple investments will be passed directly to consumers on their monthly bills.

True. But if we had only one gas company or one telephone company, it could be excessively powerful too. So, do we encourage competition between phone companies even if it does make them less efficient and more expensive and combersome, not to mention a large government bureaucracy to regulate them? Or do we allow them to monopolize and exploit their advantage unfairly?

To me, neither option is very appealing. I could see a scenario though whereby consumers' co-ops would be exempted from anti-monopoly laws, so that they can beenfit from the advantages of natrual monopolization while still being controlled by their consumers to avoid excessive powers.

That said, I think I'd still want some kind of control against monopolization, or at least controls applying to monopolies, for any other kind of monopoly.

[Machjo]

Easily.

By denying any competitors access to a market, the consumer has no rein on it at all in terms of providing service or reasonabl;e cost for goods because nobody else is allowed in to provide an alternative service.

Well, first off, it wouldn't be a question of no one else not being allowed in, but rather that they would be at a disadvantage when it comes to economies of scale or other naltural market advantage. Add to that that the consumer does have control as a voter for the board of directors. In theory, he could even vote against expansion of the company itself. If that company became a monopoly, it would mean nearly everyone in town would have to own a share, and therefore they'd all have a vote. Essentially, the community would be deciding how it's to be run.

Overpay executive staff? Fine

Hire everybodys brother inlaw to bloated salaries? Fine

Fail to reinvest in technology? Fine.

Again, that would be difficult when the board of directors is essentially voted in by the community. And of course while anti-monopoly laws would no longer apply, other laws would still apply as per any other company, so it still couldn't engage in any kind of illegal activity.

Get sick of it all as a mandatory coop memeber and want to buy the service elsewhere? Nope, ypou must belong and you must pay whateever is asked.

The flip side to that is what to do when you're sick and tired of government bureaucracy preventing a good company from expanding so as to be allowed to become more efficient? If you don't like it, you don't join the co-op and don't buy the product, or start a company of your own to compete against it. No law would be stopping you.

I have no specific dislike of consumers coops, but they should have the same regulatory oversight as any other monopoly candidate.

In some ways they'd have even more oversight in that the consumers themselves would vote in the board of directors.