Coercive Monopoly - Establishing A Coercive Monopoly

Establishing A Coercive Monopoly

According to business ethicist, John Hasnas, "most take for granted that a free market produces coercive monopolies." However, some people, including Alan Greenspan and Nathaniel Branden, argue that such independence from competitive forces "can be accomplished only by an act of government intervention, in the form of special regulations, subsidies, or franchises." Some point out that a monopolist themselves may "employ violence" to create or maintain a coercive monopoly.

Some recommend that government create coercive monopolies. For example, claims of natural monopoly are often used as justification for government intervening to establish a statutory monopoly (government monopoly or government-granted monopoly) where competition is outlawed, under the claim that multiple firms providing a good or service entails more collective costs to an economy than that which would be the case if a single firm provided a good or service. This has often been done with electricity, water, telecommunications, and mail delivery. Some economists believe that such coercive monopolies are beneficial because of greater economies of scale and because they are more likely to act in the national interest, while Judge Richard Posner famously argued in Natural Monopoly and Its Regulation that the deadweight losses associated with regulating such monopolies were greater than any possible benefit.