Economic freedom is a human right.
680 karma · joined May 4, 2008
There are conceivably other ways that Google could indirectly raise prices on consumers, but realistically it is a huge waste of money to prosecute a company that gives stuff out for free. Furthermore, threatening such action poisons the business environment by making investment more risky. It is a terrible idea.
Compared to the relevant alternatives, natural monopoly is basically harmless.
1. Natural monopoly - Returns to scale are large enough (or the market it small enough) that one firm can provide the product for a lower price than multiple firms. This is possible without government backing, but is basically harmless if entry into the industry is not blocked. The natural monopoly may be the only seller, but it still faces potential competition.
2. Artificial monopoly - Firms merge to monopoly, firms form a cartel, etc., in an industry without returns to scale. This is the kind of monopoly that people worry about, but in a free market, they are (or would be) very uncommon. There is always an incentive to cheat on a cartel agreement, and there is always an incentive to enter the industry if profits are above normal.
3. Government monopoly - Firms take advantage of government-created (whether intentional or unintentional) entry barriers to establish an artificial monopoly, or the government itself establishes a monopoly in the activity. Very common. For instance, heavy regulation might favor large firms that can more easily absorb the fixed cost of compliance.
If you are interested in learning more about this, look into the branch of economics called "Industrial Organization." The best textbook is by Carlton and Perloff; it is the one I used when I taught IO this semester.
http://pipes.yahoo.com/pipes/pipe.run?_id=zFbbu_cK3RGfhLcgn0...
I also tested it briefly on Safari 4 and it seems to be better.
By the way, since people seem to be interested, I think the best macro book is Snowdon and Vane's Modern Macroeconomics.
http://www.amazon.com/exec/obidos/ASIN/1845422082/elidourado...
"Democracy is the theory that the common people know what they want, and deserve to get it good and hard." -- H. L. Mencken
For instance, libertarians oppose government-created monopolies. But given a government-created monopoly, it's not unlibertarian to support regulating it. The optimal libertarian policy is obviously abolishing said monopoly. The second-best one is regulating it. The third-best is letting it abuse its power.
Given that you have moral hazard problems created by government, it is not somehow unlibertarian to advocate regulation to reduce excessive risk-taking by government-backed agencies. Ideally, Fannie and Freddie would never have existed. Since they did exist, the second-best case would have been for them to be purely private entities with no implicit government guarantee. The third-best case would have been for them to be purely public entities with no profit motive. The fourth-best case would have been for them to be mixed private-public entities like they were, but subject to stringent oversight. We were in the fifth-best case in which they had a profit motive, moral hazard, and little oversight.
For similar reasons, I favor a bailout. There is a time-consistency problem. The government would like to commit to never bailing anyone out. If it were able to do this, the need for bailouts might not arise. But it cannot commit; since everyone knows the government will bail big financial firms out, it basically has no choice.
None of this in any way contradicts my view that the government should not intervene in housing markets in the first place, that currency competition should exist, that taxes should be much lower, that there should be no government redistribution of incomes, that public schools should be shut down, that there should be no government provision of health care, that the draft should be abolished, that marriage should be unregulated, that prostitution should be legal, or that 12 year olds should legally be allowed to purchase heroin from vending machines.