[Borodog]

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1) Firms can gain monopoly status without the aid of government

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It is rare for firms to gain effective monopoly status without government, but it has happened at some points.

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Name two.

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The more important point to make, however, is that much anti-trust legislation is not really supposed to prevent monopoly so much as oligopoly . . .

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Why? Under what justification?

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I don't really undertand your Microsoft example. How have anti-trust laws affected the price of their software? And if the price would be lower without them, as you say, then aren't the laws actually helping other competitors because the microsoft product isn't as competitive as it could be?

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Is that supposed to be a good thing?

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It is my assertion that a market can both competitive and efficient with but a single firm. How do we know this? Because the prices are low and the firm is profiting. Under these circumstances, one particular firm is able to produce and distribute their goods and services so efficiently that their competitors cannot enter the market.

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How can it be competitive with one firm? There is no competition by definition.

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Actually, that is not true at all. This is non-competitive only under the bizarre definition of "perfect competition," one of the most useless pieces of doublethink I have ever run across. Until the early 20th century, "competition" was a behaviorial concept involving product differentiation, price advantage, etc. In the early 20th century the mathematical economists developed a mathematical model of "perfect competition," which relies on an absurd suite of assumptions such as:

a) Products are homogenoeous. This of course is absurd, as competitors in the real world will seek to differentiate their products from their competition. There are probably of order 5000 different brands of beer alone available in the "beer market," for example

b) Prices are homogeneous. Again absurd. Even given that inhomogeneous products may be expected to produce inhomogeneous prices, identical products will have inhomogeneous prices. For example, different markets may have different demands for the same products, leading to different prices. New entrants into the market may offer products at substantially lower prices (even at a loss) to enter the market (a phenomenon I call "market attack").

c) Perfect information. For perfect competition you need perfect information, which is of course absurd. All consumers cannot possibly know the details of all competitors. The whole concept of perfect information is moot in the model anyway, since the products and prices are all homogeneous!

d) Many firms. This is foolish. If by definition you are a monopoly when you provide a product that no competitor produces, every inventor or newly differentiated product would make one a monopolist. The only long running market "monopoly" that I know of was Standard Oil, who only maintained their market dominance by providing such an excellent product at such a low cost that no would-be competitors could profitably enter the market.

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Even if prices seem "low," how would you determine whether or not there were monopoly rents without a benchmark to compare with?

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You're suggesting that we should compare the "monopoly" price with some nebulous market price that would be obtained from a thousand non-existent competitors, when the actual comparison should be with no price at all--because the product would not be being produced if the "monopolist" were not providing it.

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I don't see what the firm profiting has to do with it. That's just to be expected in a monopoly situation.

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That's just the point though. The implication is that somehow, magically, a single provider will reap "monopoly profits." But of course no one is holding a gun to the heads of consumers. The monopolist does not "make" the price. The price is freely negotiated by both sides. And if the price that consumers are willing to pay is so high that the level of profit made by the provider is higher than the general level of profit in the economy, entrepeneurs and capital will be enticed to enter this new market. Only by acting competitively, even in the absence of competition, can the "monopolist" prevent others from entering the market. Unless, of course, he can use the police power of the state to simply legislate and regulate his competition away.

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Honestly, I think you are too hung up on this efficiency thing. When most markets aren't competitive, its usually because something other than the efficiency of the major player is keeping others out. There are plenty of markets in which barriers to entry are very high for a variety of reasons.

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Name two (that aren't governmental).