Monday, December 12, 2011

Milton Monday #2: Monopolies

Another common myth is that government needs to step in to break up monopolies, but often times government is the cause of monopolies. Either they, by law, are the sole provider of a good or service (public education or first class mail for example) or they put in place regulations that stifle competition.
Video here.

What's interesting, is that he may have been wrong about De Beers as well, as their diamond monopoly seems to not be as effective as it once was. They are a rare exception, in that most diamonds are found only within a small, geographic location, known in ecnonomics as a "geographical monopoly". For example, if the only oil well in the world were found in my backyard, then I would have a monopoly on oil.

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