Eva,

I said "harmful" monopoly.  If someone were to drive out all competitors by producing a better product for less money, that would not be harmful.  If they then try to take advantage of the lack of competition by raising the price through the ceiling, then competition will rapidly flow back into the market.

Let me turn this around and ask how, in a free market, could anyone cause a harmful monopoly to come into being and stay there for any length of time without government making it possible?

Those losers that depart lost because they were not as desireable by the market.  The market sent them on their way.  The winners in a free market (and there rarely is but one winner - there are usually many), are giving the customers what they want better than anyone else.   But it isn't a single instance, the market is dynamic and every minute is a new opportunity for money to fly into high opportunity niches opened by anyone foolish enough to try to take advantage of a very high market share in a way that abuses their customers.

Eva:

To answer your question ... The purpose of a monopoly is to corner the market and become the sole source of a commodity or service, and unless it provides a very superior product, it must drop the prices below those of its competitors (at least temporarily) or collude with government to drive out all competition. It then raises prices to a point that it can make huge profits because there is no other supplier of the product that is in high demand. (all common knowledge)

 But such an entity can't remain dominant for long because of its nature — it is unresponsive to customers, it doesn't have to do research to improve the product, it doesn't have to innovate. It just sits there like a big blob, raking in profits. It can't prohibit dynamic competitors arising with improvements in efficiency, effectiveness and application that the monopoly can't even conceive of. Even with patent protection it can't protect itself from radically new ideas. Without some sort of coercion against consumers or the upstarts they will have to drop prices in order to compete.

Can you conceive any product of, say, 50 years ago, if given monopoly status then, could exist today as a monopoly?  

I mistakenly sanctioned your post instead of Steve's.

Sam

Eva,

When you get very very big, you lower your shelf price to the point where small competitors cannot afford to compete. You,Mr Big, however, can afford to take a short-term loss in order to wipe out the competition.

Take a look at these points:
1.) We need to keep an accounting here, and when Mr. Big made his price very low, the consumers benefited. They all had more money to spend elsewhere because of their savings when they bought those cheap goods. This stimulates the economy, and increases jobs.
2.) It takes a long time to drive all the competition so far out of business that they don't just bounce back when Mr. Big then raises his prices. And Mr. Big has accountants, and they will tell him that he needs to push his prices way up, and for a long time, after getting rid of the competition, in order to recoup the losses he sustained selling below cost.
3.) There are always new competitiors. They are just minutes away. Money moves at speed of a mouse click. Contracts are negotiated and put in place in hours with email and phones. When Mr. Big raises his prices, he will only be a short time away from having competition all over again and he won't have the time to recoup his losses.
4.) Unless Mr. Big is an idiot, he already knows this. Pretty much everybody who has been in business long enough to become big knows this. These are simple facts that ensure that predatory pricing is never going to harm the market, or harm the consumers, or harm the nation.

In most of today's marketplaces companies are looking to increase marketshare without increasing their prices, and they always want to raise their margin, but they know that unless it is done via a patent, or copyright it won't be lasting (it will be copied).  They wouldn't buy into a silly scheme about getting a monopoly - it wouldn't work.  It wouldn't be good business.

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Sam, Thank you for the sanction... I wondered about that :-)

Eva,

...the fact that they can keep low profit margins and buy in large enough quantity to keep their own costs low cross-cuts your argument that suggests market fluidity.

I disagree. If this company is able to buy in such large quantities and otherwise act so efficiently, keeping their costs so low, and in doing so make their market totally unattractive to competition - resulting in a monopoly-like market share, there is no harm. Who has been harmed? On the moral level, no one is using force, fraud or theft - no one's moral rights are being violated. People who have capital to invest will simply look at other areas since this one is already being served so efficiently that there isn't a desire for more options. The consumers are happy.

If the government were to interfere they would end up causing the consumers to pay more, and thwart the intent of the company to provide the products at the lowest possible cost.  Government interference would in effect be punishing the company for having low costs, efficient processes, and low prices with happy consumers.

There are very few reasons why a company might want to keep their prices so low, and their operations so efficient, and the only one that makes sense is that they see themselves in a state of competition. They are smart enough to know that that if they let up, and raised their prices, that the competitors would appear. They understand that in a free market competition never goes away and that if you have 100% of the market share, you still have competition.... Competition is just waiting in the wings and will appear the minute you drop your guard.
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On another note, the very high ratio that exists today of very large corporations to smaller businesses is primarily due to extensive government intervention in the market place. The more regulations that exist, the higher the amount and complexity of taxation, the more ways in which government responds to lobby efforts and special interests, the more the government engages in bailouts, then the more large corporation will be favored and thrive while the smaller business will be driven out of existence.  Not only that, but the massive amount of regulations form a barrier to entry, a barrier to start-up that stops the creation of small businesses but not large enterprises.

Government is an anti-competition effect that falls disproportionately on small businesses.

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On a final note... I AM discussing the reality of monopoly issues! The pro-interventionists made up the harmful effects of free-market monopolies out of whole cloth long, long ago. Only government intervention can create a harmful monopoly.

Eva,

I said: 

The pro-interventionists made up the harmful effects of free-market monopolies out of whole cloth long, long ago

And you replied: 

Like your accusation that those who critique the legacy of Jeff are somehow politically motivated, the above citation is nothing but well-poisioning.

Are you unaware of the source of the monopoly theories used to generate anti-trust legislation?  Best you do your homework.

As to Jefferson, I have my opinion regarding the motivation behind the source of most of the attacks on him. These attacks are taught and published and many people pick them up, assume some truth to them, don't actually study the man and then think or themselves and then continue the spread of these attacks.

I'd say that the well poisoning is being done by those whose motives are questionable, and by the ignorant who end up carring their water.

I don't know how the logic would work to support the idea that a disagreement with my statements on the motivations of some of the people who revel in attacks on the founding fathers, or my statemtns about the ideology of the source of economic beliefs that led to anti-trust legislation would make other, separate ideas I put forth (like the one relating government intervention as favoring large corporations over small businesses) faulty. I have always been under the impression that an idea, clearly put forth, could stand on its own in the eyes of an honest and rational thinker.  

My adherence to Objectivism means I have neither the reason nor the inclination to tolerate attacks on what my reason tells me is of great value. My willingness to make judgments is being honored in name and practice.

If you are accusing me of a bias you really should be specific as to what that alledged bias is.

Eva,

I'm not going to 'prove' that I'm not a cannibal, either.

I promise I won't ask you to prove you aren't a cannibal. And it wasn't you who I was referring to when I said, "The pro-interventionists made up the harmful effects of free-market monopolies out of whole cloth long, long ago." You weren't even born back then. I was referring those people who wanted the government to intervene in the market place and created the theory that the failure of the government to intervene would lead to harmful monopolies. And I am saying that there are people who have a strong bias towards intervening in what would otherwise be a free market.

Steve (to 131),

Well you weren't born in the 1880's either.

Historically, there seemed to have been competing arguments as to the value of monopoly--everything ranging from 'greed' is ungodly (Bryan) to 'greed is good' & monopolies are evolutionary (Spengler).

So I really don't see the point in assigning personal bias to either side: historical perspective means that we can try to untangle the debate by virtue of facts as presented.

What I see is somewhat of a trade-off based upon some sort of aggregate cost-benefit. Small business are inefficient. but create the sort of propery-ownership buy-in that's socially beneficial.

Or at least that's what the French think: a huge, welfare state apparatus devotes time and money to maintaining an economomically 'unnatural' plethora of small, family-owned business.

Eva