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 13:59:53 GMT
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Viewed:
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334 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.
What are the other criteria used to determine/justify these "natural
monopolies?"
> 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.
My coworker has a power line running to his house that he occasionally uses
during peak use times on the weekend, but primarily generates his own power.
If the capital investment has to be renewed and maintained on the schedule that
is most typical, it will have paid for itself in eight years and will save him
money forever (so long as power distribution is as costly as it is -- he
actually favors neighborhood-sized coops for power generation and distribution
as the ideal, but I haven't done the math). So where exactly is that waste?
> The water and sewage systems are another example (typically owned
> and operated by local governments is the US).
I own my own water and sewerage systems. The only problem with my system is
that population density has to be maintained at under one large family per five
acres (which I like anyway) and the 3M plant about 2 miles from my house is
drawing too much from the aquifer, but we're just making them cut back.
> I am a very strong free market
> guy, but I recognize the practical need for this type of arrangement.
Based on my above stories, why?
> Are airlines natural monopolies?
>
> To put it specifically, Would it be more efficient for air travel to be a
> utility with each route managed by a single company. Rates would be regulated
> to provide the suppliers with a reasonable return on assets (The basis for
> utility rates)
I'd think not. There are lots of options and competition breeds efficiency.
Less means less. But how would you suggest measuring such a thing?
> PS: Railroads pose a similar question
Is it really analagous? Does the strictly limited pathways that rail
experiences (versus air travel) change the equation?
> 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)
New builders certainly have the option of doing that to cut costs. I'm not
opposed to using cable for my high-speed internet and cell (or VOIP) for my
voice communications. (But we need a cell tower on my mountain before that's a
realistic option.)
Chris
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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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