The benefit monopolies offer is not just that they’re good investments, but that they concentrate wealth in the hands of someone smart enough to monopolize something. Wealth tends towards entropy, so brief concentrations of it are a beautiful thing. And while markets are great at optimizing the last .1% increase in efficiently for a known process, they suck at paradigm shifts—unless there’s someone really smart with enough money to singlehandedly shift that paradigm. Google’s near monopoly on search has probably hastened the arrival of self-driving cars by a few years, saving numerous lives. Score one for monopolies! Even my least favorite monopoly, USG, has deployed money in interesting and otherwise infeasible projects, such as landing on the moon and defeating the USSR.[1]
Second is integration and incentive structure.
One simple robust solution to the innovation problem would seem to be manic monopolists: one aggressively-profit-maximizing firm per industry. Such a firm would internalize the entire innovation problem within that industry, all the way from designers to suppliers to producers to customers – it would have full incentives to encourage all of those parties to put nearly the right amount and type of efforts into innovation.[2]
[1] http://oddblots.tumblr.com/post/85817835358/stoptheslowlane-...
[2] http://www.overcomingbias.com/2014/04/rah-manic-monopolists....