Dr. Bylund’s talk on Monopoly Power addressed what he believed to be common misconceptions about monopolies and concluded with the idea that if government regulations were removed from economics, monopolies would no longer be dangerous. While I agree that government regulations which make monopolies easier to form and maintain, I think governments are not the only way in which unhealthy monopolies may be formed.
What is a Monopoly?
Dr. Bylund discusses the idea that monopolies are inevitable and that they are not a bad thing. What he meant by this is that having only one company selling a particular product is fine, and in fact is necessary for innovation to occur. With this, I agree, however I do not believe that the phenomenon he described using examples such as the iPhone are accurate to what a monopoly truly is, particularly because these companies existed in a society that had regulations preventing monopolies. To me, a monopoly occurs when a company has enough of a market share of a particular industry and enough capital to provide significant if not insurmountable barriers to entry into their market. In this way, contrary to Dr. Bylund’s assertion, I believe monopolies do have power. However, their power is not directly exerted over the consumer. Instead, monopolies exert their power over up-and-coming businesses and innovators and use their much larger capital and head start to merge or acquire a company, or drive prices so low that the newer company with less ability to do so is run out of the market. In this way, a large monopoly can maintain their control over a market.
Was the iPhone a Monopoly?
The next point of contention I have with Dr. Bylund is the examples he gave because I believe they are not true monopolies. He discusses the choice that people had to buy a flip phone over an iPhone when the iPhone first came out and how Nokia becoming irrelevant after having such a firm grasp on the flip phone market proves that innovation will always beat out a monopoly. The problem is that iPhone was never a monopoly, the were simply an improved alternative to the flip phones that already existed. Both an iPhone and a Nokia served the same purpose, the iPhone just did it better. This seems to prove Dr. Bylund’s second point that iPhone was able to “break Nokia’s monopoly,” but this occurred in a society with protections against true monopolies. Nokia was also not an oppressive monopoly within the industry. In fact, all of Dr. Bylund’s examples seemed to come from American society with protections against monopolies. All of the successes of allowing monopolies to run free he continued to describe were under the government regulations that he then went on to argue against. It was clear that he was against these government regulations, but he also spent half of his talk discussing how effective innovation works under these regulations and how well companies are able to compete with each other.
The Government’s Role in Monopolies
While I think Dr. Bylund undermined his point by discussing only what he defines as good monopolies in a society where regulations which check monopolies existed, I also do agree with his idea that the government can create monopolies and allow them to thrive through their regulations. His question “is it worth it?” when it comes to regulations is one that I believe is important to ask, and in some cases the government has overstepped. They have created the harmful monopolies they are supposed to be protecting us against. The government should only function within the economy to promote competition and reduce barriers to entry within markets, and that unfortunately has not always been the case. I think his example about utilities is a good one, but an audience comment continued to prove the point that there is always consumer choice even within these harmful monopolies. If you don’t want to pay for the utilities that the government has mandated for you, there always alternatives accessible to you if you are willing to put in enough time and/or money. This, in my opinion, once again undermined Dr. Bylund’s argument. The crux of the first half of his argument rested on the idea that monopolies are fine because people still have a choice. He then continues to say that monopolies are only bad if the government is enforcing them, but then it was demonstrated that even when the government is enforcing monopolies, consumers still have a choice. Therefore, if government enforced monopolies are bad even with people still having the same choice they would have in a non-government enforced monopoly, all monopolies which limit consumer choice to a similar degree must be bad. In the case of utilities, the example of choices given was the government-chosen utilities, solar power, or no utilities. Here we have a choice between a monopoly, a very expensive alternative for similar product results, or a significantly decreased quality of life. When Walmart enters a small town and drives small grocers out of business, people are left with a similar choice: Walmart, drive a long way to another town, or grow your own food. The first option is a microcosm of a monopoly, the second a much more expensive alternative for similar results, or a significantly decreased quality of life due, in part, to less options in what you can eat.
Monopolies in the Absence of Government Regulation
In my opinion, Dr. Bylund completely ignores the idea that a large enough company, or a large enough monopoly, can exert as much or more power over the market they occupy than the government. Yes, there are no legal barriers to entering the markets occupied by these monopolies without government regulations, but there will always be monetary barriers, and a monopoly will almost always have more capital than a new competitor. This gives the company which monopolizes the market significant control over their competitors, comparable to the control the government would hold over them with regulations limiting their access to the market. Since the monopoly can create barriers to entry for competitors, the monopoly, in turn, will create barriers to innovation and begin to exert power over consumer choice. While it is certainly true that government regulations need to be evaluated to determine their costs and benefits within a market, I believe this is not a cut and dry no government versus all government conversation. There can be a middle ground where the government regulates monopolies that are abusing their power to create barriers to entry within their market but does not make regulations that create further barriers to that entry.
Bylund, P. (2022, February 15). Monopoly Power: What Should We Fear? OSU Free Enterprise Society. https://www.facebook.com/okstate.fes/videos/539962257140227