{"id":26241,"date":"2021-02-08T20:23:15","date_gmt":"2021-02-09T00:23:15","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=26241"},"modified":"2021-02-08T22:12:43","modified_gmt":"2021-02-09T02:12:43","slug":"dangers-of-monopolies","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/dangers-of-monopolies\/","title":{"rendered":"Dangers of Monopolies: Why We Need Competition"},"content":{"rendered":"\n<p>What are the dangers of monopolies? Why are monopolies so harmful for economic development?<\/p>\n\n\n\n<p>The dangers of monopolies stem from two issues: lack of competition and government control. Government interference can cause market tensions, and a need to bend the market to suit their own gain. <\/p>\n\n\n\n<p>Read more about the dangers of monopolies.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Monopolies and Neighborhood Effects<\/strong><\/h2>\n\n\n\n<p><strong>Governments are always coercive. <\/strong>Even in democratic societies, governments operate on the principle of majority rule. Those in the minority must, by definition, yield to the will of those in the majority.<\/p>\n\n\n\n<p>Because of their collective nature and their need to serve the masses, governments cannot satisfy individual needs\u2014instead, they must demand conformity. After all, you cannot have national legislation tailored to suit your individual needs (if anything, national legislation is more likely to work <em>against <\/em>your individual interests, a topic we\u2019ll explore in greater detail later in the summary).<\/p>\n\n\n\n<p><strong>This is in contrast to how markets operate.<\/strong> <strong>By their very nature, free markets serve the individual customer on a voluntary basis<\/strong>. As a buyer, you are free to choose another seller who offers you a fairer price or a better good.&nbsp;<\/p>\n\n\n\n<p>Of course, this is not to say that there is <em>no <\/em>role for government in a <a href=\"https:\/\/www.shortform.com\/blog\/market-society\/\">capitalist society<\/a>. Even those committed to free-market principles accept the idea that there are some societal functions that the market is unable to perform, such as national defense, domestic security, and the enforcement of property rights. In this chapter, we\u2019ll look beyond these basic functions to examine two of government\u2019s most important responsibilities\u2014curbing monopolies and regulating the neighborhood effects of economic activity.&nbsp; Keep this in mind when discussing the dangers of monopolies. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Dangers of Monopolies<\/strong><\/h2>\n\n\n\n<p><strong>A monopoly occurs when a market for a particular good or service has only one seller. <\/strong>Often, these are technical monopolies, where the production of a particular good or service is dependent on access to an expensive or complex technology that only one firm possesses.<\/p>\n\n\n\n<p>Because they make it impossible for buyers to find an alternative seller, markets dominated by monopolies cannot be considered free. Nevertheless, there are some markets that naturally lend themselves to the formation of monopolies, usually those that involve large startup costs or complex proprietary technology. In the economic history of the United States, railroads and telephones started out as monopolies.<\/p>\n\n\n\n<p><strong>Because monopolies pose a threat to economic freedom, it is a legitimate exercise of government power to limit them or break them up.<\/strong> Thus, a capitalist ought to be in favor of economic regulations like the Sherman Antitrust Act. It is important, however, that governments wield this power on an equitable basis\u2014if large businesses are to be broken up by the Justice Department through <a href=\"https:\/\/www.shortform.com\/blog\/executive-order-14036\/\">antitrust laws<\/a>, monopolistic unions that control the supply of labor in a given market must also be subject to the same laws.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What are the dangers of monopolies? Why are monopolies so harmful for economic development? The dangers of monopolies stem from two issues: lack of competition and government control. Government interference can cause market tensions, and a need to bend the market to suit their own gain. Read more about the dangers of monopolies.<\/p>\n","protected":false},"author":5,"featured_media":18015,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[81,24],"tags":[204],"class_list":["post-26241","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","category-society","tag-capitalism-and-freedom","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Dangers of Monopolies: Why We Need Competition - Shortform Books<\/title>\n<meta name=\"description\" content=\"Lack of competition is one of the main dangers of monopolies. Monopolies suppress economic freedom and should be avoided. Read more.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/dangers-of-monopolies\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dangers of Monopolies: Why We Need Competition\" \/>\n<meta property=\"og:description\" content=\"Lack of competition is one of the main dangers of monopolies. Monopolies suppress economic freedom and should be avoided. 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