Monopolies, companies utterly dominate the sale of a good or service, have a bad name in the United States, and the country rightly maintains laws against the anti-competitive things that many do. On the other hand, their perfectly legal cousins, monopsonies — entities that likewise dominate the purchase of good or service — are one of the modern era’s greatest boons to consumer welfare. As many questions arise about the size and scope of companies involved in businesses ranging from retail to social media, it’s important to realize that while some types of “bigness” can be bad for consumers, others are very good.
Monopolies, of course, can do a lot of harm. The late 19th and early 20th century trusts that dominated everything from oil to sugar were nearly all corrupt, cronyistic institutions that relied on underhanded tactics to maintain market position. Even less rapacious monopolies like the old New Jersey-based AT&T — which once owned nearly every telephone in the country — proved themselves to be staid and inefficient. Although some later-day critics find “monopolies” in markets that appear highly competitive by commonsense measures, there’s a near universal consensus amongst economists that monopolies on sales gained through unfair means are almost always bad for consumers.
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