Nature of Monopoly 

When any company has a monopoly on any product or service, the (natural) free-market incentive for improvement has been reduced or eliminated. The customers have to accept whatever prices and services are offered by the monopoly, or go without those products or services.

Politicians sometimes claim to "protect the public from monopolies" by regulating business and trade. Teddy Roosevelt (and others) made a big deal (and political careers) about "trust-busting" destroying companies they called monopolies.

Private companies (even Microsoft) cannot corner the market without the help of government regulation. No matter how big any company becomes, it will have competition unless government stops others from competing.

Many wars have been fought over trade monopolies. In the Opium War, Britain and the US forced China to buy opium and sell tea. The American Revolution was in part caused by the tea monopoly of the British East India Company. Japan's attack on Pearl Harbor, bringing the US into WWII was instigated because the US/British oil monopoly cut off gasoline to Japan, thereby threatening to shut down industry and transportation.

The results of monopoly are always combinations of high prices, inefficiency, poor service, lack of innovation, shortages, and stagnation.

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Monopoly Collectibles

Post Office Monopoly in U.S.

Question: How did the USPS get a monopoly on delivering mail in the United States? 

Answer: The United States Postal Service was set up by Congress to deliver mail, but it wasn't originally a monopoly. When Lysander Spooner (a revolutionary patriot who later became a Justice of the Supreme Court) started a competing mail service, Congress passed a law prohibiting other companies from competing in the delivery of "regular mail".

Here's a story showing the monopolistic attitude prevalent in the USPS, and one customer's reaction.

I used to have a post office box to receive my mail because, when I was at work during the day, I wanted the things I bought through the mail to be safe, rather than just left on my door step like the postman used to do. And then I could pick up my mail and any mail-ordered boxes when it was convenient for me. They would be safe at the post office until I got there.

But it kept being a problem when I ordered something from a catalog or on eBay when the shippers wanted to deliver by UPS or Federal Express. That's because the United States Postal Service (USPS) won't accept things shipped by anyone else other than their own people. And yet, being a small rural area, there wasn't enough of a market for some other mailbox company, like Mailboxes Etc. or others, to open up an outlet. It might have been nice if the post office had not been there, so one of the others could be there instead. (I think almost all other companies will accept all mail including letters and packages from the post office, UPS, and others.)

The head postal lady (at the post office I went to) was always nice and I was nice to her. But one day I said that it was a real problem for me that they would not receive any packages sent by UPS. I was always having to make special arrangements, which was not the purpose of having a p o box. I could not believe what she said to me. She said that UPS was her competition, and that she couldn't receive something from the post office's competition.

I guess I knew that was the reason, but it made it seem more unreasonable when I heard her saying those words.

When I thought about it later, I was even more upset. Her company (the USPS) has a monopoly advantage (a keyword this website uses) because it gets its money from taxes that I and everyone pay. That monopoly stops other companies from having the same business opportunities as they have. But it's not fair that the USPS gets to overpower other companies but it doesn't make up for the loss of services that the other companies would provide. I know I am not the only person who loses in this deal.

I really appreciate this contribution. This person's story illustrates how the advantage of monopoly keeps private businesses from competing, thereby creating no free-market incentives to provide the services that customers want and need.

On the one hand, the post office is usurping competition by using public monopoly monies that the competition doesn't get (giving the post office a competitive advantage).

On the other hand, the post office won't offer services that the displaced competitors would offer.


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