Subject:
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Re: debate fodder from an unusual source...
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Tue, 15 Oct 2002 11:33:52 GMT
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Viewed:
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321 times
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In lugnet.off-topic.debate, Lester Witter writes:
> Economist have a concept called "natural monopoly" which refers to a industry
> where the capital investment is so large that it is not in society's best
> interest for there to be one than one supplier. The classic example is the
> local power industry (Most utilities are natural monopolies). It would be
> terribly wasteful to have two sets of power lines running to each house, so
> each area is serviced by a single company under a "fanchise" (not quite the
> right term) arangement regulated by the local, state and federal (US model)
> governments. The water and sewage systems are another example (typically owned
> and operated by local governments is the US). I am a very strong free market
> guy, but I recognize the practical need for this type of arrangement.
I assume here you are taking about power supply rather than generation?
Likewise for water supply and sewage collection - rather than water and
sewerage treatment?
>
> So here is the question for debate:
>
> Are airlines natural monopolies?
For some cities the airports may well be. But I think that as long as Airlines
have to "bid" for slots the systems should work.
>
> To put it specifically, Would it be more efficient for air travel to be a
> utility with each route managed by a single company.
Many would argue that this is how BA works out of Heathrow where it does not
bid for its slots - it holds them indefinitely. The results is that it has
overheads nearly twice the UK average... Why? Because the UK "free marketers"
rigged the market!
> Rates would be regulated
> to provide the suppliers with a reasonable return on assets (The basis for
> utility rates)
In an ideal world this would work. However, I have read what the ENRON "free
marketers" did to the regulated power market in the US to get more than a
"reasonable return on assets"...
>
> Lester
>
> PS: Railroads pose a similar question
>
> PPS: An interesting side note: Many if not most houses in the US have both
> telephone (wires) and cable (originally for TV). Since current and anticipated
> technology make these systems redundant. Should we phase out the one that is
> more expensize to maintain (this would be a hugh expense because of existing
> infa-structure in existing buildings)
I'm biased on this. My water utility bust my phone cable two weeks ago....
Scott A
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Message is in Reply To:
 | | Re: debate fodder from an unusual source...
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| Economist have a concept called "natural monopoly" which refers to a industry where the capital investment is so large that it is not in society's best interest for there to be one than one supplier. The classic example is the local power industry (...) (22 years ago, 15-Oct-02, to lugnet.off-topic.debate)
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