- Capitalism and Alternatives -

Not quite doc

Posted by: Gee ( si ) on September 27, 1999 at 01:43:22:

In Reply to: Not quite ... posted by Dr. Cruel on September 20, 1999 at 02:20:31:

: Sorry, Gee, but there is actually a rationale for anti-monopoly legislation. The principle behind it, shown so vividly by the robber-barons of the 19th century,

I thoroughly recommend "The Myth of the Robber Barons by Burton W., Jr Folsom " before a discussion on 'robber barons' and not the huge difference between, for instance, the 'big four' and their southwest railway, and JJ Hill and his railroad.

: If I own all the train lines, I can artificially raise the cost of moving freight by rail, over and above what might be expected in a competitive market.

Who does rail compete with? not only other railroutes but also road, air, even rivers. If you owned all the railroads you probably could charge more, only to the point where the alternatives were *not* cheaper than yours.

And not for all time. 'all railways' simply means all of them today. Your high prices would attract competitors willing to speculate on rail building, or competitors simply wishing to keep you struggling by forcing you into regular price wars (there go your reserves). Technological developments could leave you standing in 20 years.

Irregular of unpleasant pricing changes could lead to your major haulage clients going with roads and waterways. In other words you still need to compete, even when you appear to have the upper hand. It isnt plain sailing as the fantasy of monopolies holds.

: If the capital investment in such an enterprise is sufficiently high, or the assets to develop are sufficiently rare, this sort of thing can be kept up indefinitely, barring government intervention.

Only useful where the demand is inelastic and alternatives are non existent. Maybe if you owned all the rail, road and rives in America you might become 'too' powerful - but only to your disadvantage. Why strangle the very people who feed you by over pricing? Why destroy the economy and ruin your five year profit plan?

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