What is AC?

[Borodog]

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Did you read the post?: market failure is used to describe some sort of inefficency in the market; their are different kinds of inefficiencies, all defined technically/objectively as opposed to normatively, just like market failure is.

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Then simply do so.

How do you objectively identify a market failure?

[Propertarian]

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Is that why there were dozens of private turnpike companies providing hundreds of private roads in England and the United States before they were monopolized by government?

Is that why there are private arbitration systems all over the world?

[/ QUOTE ] Somebody doesn't know what a "natural monopoly" is. Wiki again, monopoly this time: "An industry is said to be a natural monopoly if one firm can produce a desired output at a lower cost to the industry than two or more firms.[3] [2] Unlike in the ordinary understanding of a monopoly, a natural monopoly situation does not mean that only one firm is providing a particular kind of good or service. Rather it is the assertion about an industry, that multiple firms providing a good or service is less efficient (more costly to a nation or economy) than would be the case if a single firm provided a good or service."

It's not that the market didn't provide these things; it's that competition doesn't work in these things.

Also, somebody doesn't know what a "monopoly" is. By the Austrian definition, no. By the useful definition that wasn't invented to defend a political ideology, then yes, hundreds have existed.

[Propertarian]

I did. Market failure= term used to describe a situation or area in which markets do not allocate goods and services efficiently.

[Borodog]

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Is that why there were dozens of private turnpike companies providing hundreds of private roads in England and the United States before they were monopolized by government?

Is that why there are private arbitration systems all over the world?

[/ QUOTE ] Somebody doesn't know what a "natural monopoly" is. Wiki again, monopoly this time: "An industry is said to be a natural monopoly if one firm can produce a desired output at a lower cost to the industry than two or more firms.[3] [2] Unlike in the ordinary understanding of a monopoly, a natural monopoly situation does not mean that only one firm is providing a particular kind of good or service. Rather it is the assertion about an industry, that multiple firms providing a good or service is less efficient (more costly to a nation or economy) than would be the case if a single firm provided a good or service."

It's not that the market didn't provide these things; it's that competition doesn't work in these things.

Also, somebody doesn't know what a "monopoly" is. By the Austrian definition, no. By the useful definition that wasn't invented to defend a political ideology, then yes, hundreds have existed.

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So, competition doesn't work in those things, even though it clearly does, since there ware, again, dozens of private turnpike companies operating hundreds of different routes, clearly competing for travelers, and there are competitive private arbitration services all over the world?

I'm still waiting for a single example of a market monopoly. I'm also waiting for the explanation of how a government sole provider that outlaws all competition is magically not a monopoly.

[Borodog]

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I did. Market failure= term used to describe a situation or area in which markets do not allocate goods and services efficiently.

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How do you objectively identify when goods and services are not allocated efficiently (in the absence of profit and loss signals, which of course make the problem trivial; cost accounting is a wonderful thing, you know)?

[AlexM]

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No, it is simply more profitable to not use violence or steal.

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No, I do not see why. See, I(and a whole ton of other people just like me) just came and took everything you thought was yours, along with everyone else's. I find that to be a pretty profitable day.

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In the process, I killed you. Seems pretty unprofitable to me.

It's like randomly going all in UTG with 72o. You might win a lot of little pots and you may even get lucky and win a huge pot, but overall it's negative EV.

Of course, just like most people play terrible poker, most people aren't going to do the profitable thing in the market. In fact, that's why we have the government we do,

[Paragon]

Identifying a market failure is like trying to name an animal currently alive that doesn't deserve to be.

[Borodog]

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Wiki again, monopoly this time: "An industry is said to be a natural monopoly if one firm can produce a desired output at a lower cost to the industry than two or more firms.

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Ah, but this is stupid and short sighted. It might be the case that one firm could produce a desired output at a lower cost to the industry than two or more firms at that time, but it is only competition that drives down costs over time; hence competitive markets always can produce desired outputs at a lower cost to the industry than a single historical monopoly firm could. Market competition drives industries toward efficient production via profits and losses. Monopolies do not need to be efficient, therefore they will not be so.

And please don't waive your hands again and claim that there exist goods or services for which there is no competition. There are a thousand different routes from my house to my job. There are hundreds of different private arbitrators I can use to settle disputes for which the government has not outlawed it.

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Unlike in the ordinary understanding of a monopoly, a natural monopoly situation does not mean that only one firm is providing a particular kind of good or service. Rather it is the assertion about an industry, that multiple firms providing a good or service is less efficient (more costly to a nation or economy) than would be the case if a single firm provided a good or service."


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Thanks for this beautiful quote. ALL such statements are merely subjective assertions.

[tolbiny]

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roads and court systems are both natural monopolies,

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roads are not "natural monopolies" by any definition, as they have existed via private enterprise plenty of times in history prior to government monopolization. I posted this a few days ago.

I highly recommend "How Capitalism Saved America" by Thomas DiLorenzo. From the chapter highways of capitalism where he discusses early private roads in the 1800s.
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But why did the private turnpike industry flourish in the first half of the nineteenth century? After all, owning stock in a turnpike company in the early nineteenth century promised a very meager return of 3 percent or less annually. But, as was widely understood at the time, additional economic benefits would accrue to such investments. Local merchants had strong incentives to invest in private turnpikes because they would bring more commerce to their towns. Landowners would see their property values rise, and cities would more generally prosper as improved transportation extended the division of labor and the economic benefits derived from it. It was also understtod that the building of roads would encourage settlement and expand the size for markets for merchants' goods. As one Benjamin De Witt wrote in 1807, "turnpikes encourage settlements, open new channels for the transportation of produce and merchandise, increase the products of agriculture, and facilitate ever species of internal commerce."

[Propertarian]

Just because more than one company exists does not mean competition is working effectively. A natural monopoly, once again using wiki: "An industry is said to be a natural monopoly if one firm can produce a desired output at a lower cost to the industry than two or more firms". Competition may exist, but the outcome is not as efficient as if one entity was providing it. Best of all, you can use democratic accountability on the natural monopoly as well.

If you've ever been to a city you should realize why private road making doesn't work in all situations. You can't actually compete over the road to any specific area; a business can only be directly attached to a couple of roads; their can't be any effective competition between providers on individual roads and roads to some place, although their can be more than one provider of roads in general. I.E. their is no competition for "road that that one extremely popular stadium/concert hall is on" or "road that Harvard is on". If Harvard is on road X; you need to cross it to get to Harvard, then their is only one buyer/seller for "the road to Harvard", a distinct product/service. Even if Harvard is on five roads, somebody could buy all of them if privatized, and jack up the price to a ridiculous ammount, with kids stuck paying a 50k/year tuition and facing the prospect of permanent bad grades if they don't cross the road being stuck paying hundreds of dollars daily to cross it. It is beyond scary that you don't realize this and the problems it entails. Do you really want to have 12 identical roads side by side all going to the same place when their is only enough traffic for one anyway? Wouldn't that just be a waste of time, resources, money and space?

The government started providing roads because the market wasn't doing a good job of providing them; simple history.