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What are the pros and cons of monopolies? Show more Show less

The word monopolies has negative connotations in economic history, but recently monopolies have been praised by people such as Warren Buffett and Peter Thiel. The arguments for and against are not new, but now they have better empirical support.

Monopolies are damaging to economies Show more Show less

Monopolies choke economies: competition is central to a healthy economic system
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Monopolies lead to higher prices

With no consumer choice, companies have pricing power.

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Context

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The Argument

Countless studies show that monopolies lead to higher prices when a strong company faces off against diffuse consumers. The evidence is laid out The Myth of Capitalism: Monopolies and the Death of Competition. Also, John Kwoka has done metastudies of mergers and shown that prices tend to rise when industries move below six major players. (In some cases monopolies may lower prices when monopolies abuse their market power to squeeze suppliers.)

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Framing

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Premises

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Rejecting the premises

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This page was last edited on Sunday, 4 Nov 2018 at 17:05 UTC