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by meanduck
3424 days ago
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And I cant believe I have to type this on HN of all places. No one denies that monopolies are risky. In fact this is the argument against anti-trust regulations, which is basically a monopoly granted to very few people (which in practice, means a guranteed monopoly to a colluding subgroup of political class). There are probably more cases of harm done by this monopoly than by corporations monopolies. Also one major difference, Corporations have to earn their monopolies where the political class dont. Only one of these two will not think twice before abusing it. We already have a protection agaisnt monopolies aka free market. |
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The best example is anything that requires a wire run to every home. The issue is high fixed costs whether or not someone becomes a customer, with low operational costs after. Therefore if a second company runs wires through the same neighborhood, between them you have large sunk costs which a competitive price that does not let you recoup the costs of infrastructure.
Taking numbers from http://journals.uic.edu/ojs/index.php/fm/article/view/1072/9..., the cost of running a wire by a home in the early 2000s was roughly $750, and the fixed cost of connecting it is about $750 again. The cost to operate that line is under $15/month. Those costs are surprisingly close to constant across a wide variety of kinds of cities. (Dense cities require less distance, have more regulation, and more other things running through the space that you have to worry about not breaking.)
To give a historical example, Bell Telephone ran wires everywhere. They operated under various anti-trust regulations for a long time. They were barred from cable TV and so another set of wires got run. Then Bell was broken up by force, with interoperation rules to prevent monopoly again. Today, with the internet, we have seen a convergence of these two sets of wires. So most of us live in places where we have one or two choices for getting internet over a wire. One possibly from a former cable company like Cox. One possibly from a former telephone company like Verizon. Very few of us have a third option. Without government involvement it is unlikely that 2 options will remain indefinitely viable for most of us.