Where Does Monopoly Power Come From?
1st September 2009
Bryan Caplan is not afraid to ask the Politically Incorrect question.
Textbook accounts of monopoly usually take the existence of a monopoly for granted, then analyze its consequences. When I was an undergraduate, this usually provoked me to argue with the textbook. “Where did this ‘monopoly power’ come from?!” I’d ask. My inner rant then continued: “If the firm has a monopoly because the government made competition illegal, the solution isn’t antitrust; it’s legalizing competition. If the firm has a monopoly because it’s the best, the solution isn’t antitrust; it’s a little freakin’ appreciation.”