posted
Is anyone worried by the flurry of takeovers, mergers and buyouts that have swept the nation in the last couple years? And the last couple months especially. Whirlpool bought Maytag (or the other way around, I don't remember), giving them a huge share of the US market. The telecom mergers have been swift and stunning. Verizon bought MCI, SBC bought AT&T, and is now trying to buy BellSouth, and is taking over Cingular. Sprint merged with Nextel. Time Warner and Comcast bought Adelphia.
There's talk of Cisco and Motorola merging, and this just after Cisco purchased Scientific Atlanta. Lucent technologies was just bought out by a French rival.
Bush has yet to direct a refusal for any of this companies to merge, saying that American companies need to merge and grow stronger like that to play in the big waters of a global economy. But anti-trust hawks are starting to wonder if customers won't soon feel the backlash of decreased competition. The larger these companies become, especially in the telecomm field, the harder it will be for smaller start-ups to break into the market.
Still, I have to wonder if it isn't a good thing with the global market place. Larger companies, especially ones that have a vertical integration can be much more competitive on a global scale. And with Indian markets especially opening up soon, that sort of competitive capability is going to be crucial. I wonder though, if and when these megamergers start to hurt the American consumer, how deeply will they be invested in foreign markets, and how much will it hurt America's economy to break them up when they start to pose a threat?
Good thing TR never had to worry about a global economy.
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Yeah. I do worry. My job right now consists of writing summaries of news from the financial markets for several UK websites, and it seems like all that has been driving the markets in Europe, the UK and the US are mergers/takevoers and rumors of mergers/takeovers. Reminds me of a small-town high school, all the gossip that goes on and the amount of money that changes hands on the mere possibility that some company might buy another.
Although, I'm not nearly so concerned about the lack of choice and higher prices as I am the amount of political power the large conglomerates seem to accumulate as they grow larger. It already goes on often enough, but I don't like the idea of even more political decisions being made on the basis of what is best for the shareholders of a company rather than on the basis of what is best for the people of the world and the environment.
It is all well and good to say, "Well, become a shareholder", but in reality shareholders in companies will always be a small minority of the total population of the world. I'm not comfortable with decisions being made with the welfare of the few in mind rather than the welfare of the whole community, be that community a town, a state, an entire nation, or the world.
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Is it true that a large company can bully a smaller, similiar company into merging? If so, how would they do that?
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I haven't seen the latest numbers, but the last I knew someone did a study, the rate of mergers and acquisitions had actually gone down despite some big ticket ones. They've been getting more press lately, but I'm not sure how well that reflects reality.
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If you're a MAJOR stockholder then you get a say, but an average person that owns a little bit of stock is ignored just as handily as someone without.
cheiros -
I'm not sure how that works in every situation, and I think it's impossible for a private company to be taken over. But they can initiate a hostile takeover of a publicly traded company by buying out 50.1% of the stock in that company. I'm not sure how else they do that.
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Oh, I thought with publicly traded companies the CEO had to own ~50.1% of the stock to prevent things like that and to reflect their own dedication to the company.
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If there are a lot of small shareholders in a company, they can get together and vote as a bloc, but that takes much more organization than most groups of shareholders can muster up. To successfully change company policy in that way would be about like a write-in candidate becoming President of the United States. Not very likely.
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You guys just better hope I can't get both Park Place and Boardwalk. Then you'll really be in trouble...
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Won't matter much, my hotels on the other side of the board will bilk all the money out of anyone before they hit your side of the board.
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quote:Originally posted by cheiros do ender: Oh, I thought with publicly traded companies the CEO had to own ~50.1% of the stock to prevent things like that and to reflect their own dedication to the company.
You NEVER want to buy stock in a company where one person owns more than 50%.
posted
I suspected something was up when Cingular (who has offered combined billing with my SBC local bill for years) took over AT&T Wireless and then suddenly SBC became AT&T...
Have all the Baby Bells reconsolidated now?
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All but one, I think I recall reading not too long ago. Not sure, and I don't know which the "all but one" would be, but this seems to be lodged somewhere in my memory banks. So I could, of course, be wrong. It's just that I read so much of this kind of stuff for work that it all blends together after a while.
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Browse through this for a bit. Then if you're not feeling completely overwhelmed, try TheyRule.net and see the interlocking directorships of the various countries. It's as of 2004, and it doesn't look as though it's been updated since then, but it's bad enough.
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Does this mean my Cingular service is going to start sucking?
I mean, sucking more than it already does because cell service in this city is horrible for all providers, and Cingular actually has more towers than everybody else.
Might raise your rates. At the same time, it might lower your rates. But it's highly unlikely that your actual service will get worse. If anything, with access to more towers and satellites to bounch your signal off of, the network should only get stronger.
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Don't forget the largest monopoly of all... The US Government.
It constantly raises it's prices (and when it reduces the rate of growth it calls it a "cut") It has tons of services few people use but all must pay for. It has no competition at all in it's service area. It decides what you can do with your body, who you can marry and even if you may live or die.
All these other monopolies suck big time (especially SBC/AT&T) but the Federal Gov't is the worst of the lot by an order of magnatude.
quote:Originally posted by Xaposert: You guys just better hope I can't get both Park Place and Boardwalk. Then you'll really be in trouble...
When my brother was in college, I played a game of Monopoly with him. He had Boardwalk, and I had Park Place. And oh, did he want Park Place.
Well, we also were splitting Mediterranean and Baltic, and the light blue properties. What are they, Oriental, Connecticut and something?
Anyway, I offered to give him Park Place if he gave me those two little monopolies and a small sum of cash. Just enough for me to build on my monopolies and deny him the ability to build on his unless he was lucky enough to hit Free Parking.
He thought I was an idiot. After I bankrupted him, he was actually gracious enough to thank me for teaching him an important lesson.
Monopolies won't help you if you can't make good use of them.
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quote:Originally posted by The Pixiest: Don't forget the largest monopoly of all... The US Government.
It constantly raises it's prices (and when it reduces the rate of growth it calls it a "cut") It has tons of services few people use but all must pay for. It has no competition at all in it's service area. It decides what you can do with your body, who you can marry and even if you may live or die.
All these other monopolies suck big time (especially SBC/AT&T) but the Federal Gov't is the worst of the lot by an order of magnatude.
Pix
Amen. And I'd add that the only bad monopolies are those which are propped up by the government. When the government isn't interfering in the marketplace, and when criminal acts are being prosecuted, the only way you can create and maintain a monopoly is to give the best service to the consumers. The need for anti-trust legislation was a result of abuses that were absolutely dependent upon government patronage. The "robber barons" would never have gotten off the ground without government grants.
The whole anti-trust thing is a scam.
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Speaking as someone with a degree in economics, it's only not borne out by certain economic models. It is, however, borne out by history. To the extent that a model doesn't match actual events, it's a failed model.
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Since I am the only one here to remember when they broke up Ma Bell, I need to declare that to be one of the five dumbest things we ever did as a Nation. I won't buy a phone that wasn't built by Western Electric. So, I still have to spin the dial. But, they always work. If the Bell system could be reconstituted, (It is probably too late.) Maybe communication gear would last longet than the package it is sold in. EDIT for Lisa: My Masters is in Economics also.
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Well, I definitely agree most antitrust actions in history haven't been against really harmful monopolies, just against companies that have gathered the country's distaste, but that doesn't mean there aren't harmful monopolies.
First of all, as you should well know sL, anything which constitutes a monopoly under the economic definition is, by definition, operating in a way that creates a deadweight loss for society.
Second, if you're going to argue that this hasn't happened ever in history, I would love to see your data. Even a small survey study. Surely you have such data to make such a broad assertion?
Third, if your argument is going to be that they couldn't have been providing less than the best service for the price as another firm would have replaced them, I'm going to wonder about circular reasoning, and note that should another firm try to enter a small market niche the first firm could merely shift to competitive pricing, removing any advantage for the second firm. Thus, even if the firm in a market niche is practicing monopoly pricing, if that market niche is small, there is no incentive for the second firm to enter.
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quote:Originally posted by starLisa: Well, we also were splitting Mediterranean and Baltic, and the light blue properties. What are they, Oriental, Connecticut and something?
quote:Originally posted by starLisa: Well, we also were splitting Mediterranean and Baltic, and the light blue properties. What are they, Oriental, Connecticut and something?
quote:Originally posted by Artemisia Tridentata: Since I am the only one here to remember when they broke up Ma Bell,
One of.
quote:Originally posted by Artemisia Tridentata: I need to declare that to be one of the five dumbest things we ever did as a Nation. I won't buy a phone that wasn't built by Western Electric. So, I still have to spin the dial. But, they always work. If the Bell system could be reconstituted, (It is probably too late.) Maybe communication gear would last longet than the package it is sold in.
Amen.
quote:Originally posted by Artemisia Tridentata: EDIT for Lisa: My Masters is in Economics also.
It's only half of my BA, actually.
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quote:Originally posted by fugu13: Well, I definitely agree most antitrust actions in history haven't been against really harmful monopolies, just against companies that have gathered the country's distaste, but that doesn't mean there aren't harmful monopolies.
Hmm. Do you think you could name one? A single one, I mean. One that didn't have governmental acts propping it up in the first place? One that didn't engage in acts that are considered criminal outside of the whole anti-trust arena?
quote:Originally posted by fugu13: First of all, as you should well know sL, anything which constitutes a monopoly under the economic definition is, by definition, operating in a way that creates a deadweight loss for society.
Not only shouldn't I know, I don't know. I know that's the claim, but I'm still waiting for an example. Remember Alcoa? Remember the rationale of the trust-busters?
quote:In the 1945 antitrust case of United States v. Aluminum Company of America, U.S. Appellate Judge Learned Hand, playing the part of Judge Jackson, convicted Alcoa of violating the Sherman Antitrust Act, and in effect stripped the successful aluminum maker of its market hold.
After the government sold plants to competitors Reynolds Aluminum and Kaiser Aluminum, Alcoa's market share dwindled to 51 percent from 80 percent.
Also, Alcoa shareholders were compelled to sell shares in Alcan, Alcoa's subsidiary.
Here was Judge Hand's rationale for lowering the boom on Alcoa: "It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field," he said.
"It insists it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace every opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel."
In other words, shame on Alcoa for running such a great business. It committed the crime of building economies of scale to control costs so it wouldn't have to raise prices on consumers.
The nerve of Alcoa anticipating greater demand and embracing new opportunities. How dare it take advantage of its experience and connections with suppliers. How dare it hire elite personnel. That's no way to run a business, at least not according to the government. Tsk, tsk.
quote:Originally posted by fugu13: Second, if you're going to argue that this hasn't happened ever in history, I would love to see your data. Even a small survey study. Surely you have such data to make such a broad assertion?
Fugu, all it takes is a single example to bring my claim crashing down to the ground. You can't seriously be suggesting that I comb through every single business in all of history and rule each one out, can you? No, I'm afraid that if you want to make the far-reaching claims that supporters of anti-trust legislation want to make, you're going to have to produce at least one example that justifies those claims.
Just one.
quote:Originally posted by fugu13: Third, if your argument is going to be that they couldn't have been providing less than the best service for the price as another firm would have replaced them, I'm going to wonder about circular reasoning, and note that should another firm try to enter a small market niche the first firm could merely shift to competitive pricing, removing any advantage for the second firm.
Um... so what? It's not as if competitiveness is a right guaranteed by the Constitution. So a second firm doesn't enter the market. Big deal.
quote:Originally posted by fugu13: Thus, even if the firm in a market niche is practicing monopoly pricing, if that market niche is small, there is no incentive for the second firm to enter.
quote:if you want to make the far-reaching claims that supporters of anti-trust legislation want to make
Luckily, I don't.
You make an unsubstantiated leap (a rather absurd one, given how I started my post) -- that I support the traditional trustbusters. I don't. I favor a set of mild economic regulations that mitigate the deadweight losses caused by what monopolies (in the sense of firms practicing monopolistic pricing) do exist.
quote:Um... so what? It's not as if competitiveness is a right guaranteed by the Constitution. So a second firm doesn't enter the market. Big deal.
For someone versed in economics, you have breathtakingly missed the point. The point isn't whether or not another firm enters, the point is a firm can survive in an economic niche, practicing monopoly pricing (which is, by definition, not providing the best service at a price), and be impossible to dislodge.
As for why I haven't provided a counterexample, I'm searching for one that you wouldn't just toss because "oh, they're providing the best service" (though I suspect proof of that would not be forthcoming on your part). Of course, since best service is only a meaningful term in the context of a price, what I need to show is a firm practicing monopoly pricing. Firms are notoriously difficult about providing sufficient information to demonstrate that conclusively.
Of course, you seem to have admitted the situation I outlined above could exist, as much as you missed the point. That situation demonstrates a case where a monopoly might exist charging a price creating a deadweight loss in society.
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OK, I'm back. If we return to the AT&T (the real one) example. Since the breakup, we have witnessed a whole system change from innovation driven by Engineers, to one that is driven by Marketeers. Decisions are made based not on the communications needs of the customer. But, on increasing sales. Planned obsolescence and market share were introduced into the telecommunications system of the Nation for the first time. Now, you are going to point to the innovations that we have seen. But, the true technological advances over the last quarter century are almost entirely the result of R&A funded by the other big monopoloy (Government) that this thread has taken pleasure in villifying.
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quote:Um... so what? It's not as if competitiveness is a right guaranteed by the Constitution. So a second firm doesn't enter the market. Big deal.
For someone versed in economics, you have breathtakingly missed the point. The point isn't whether or not another firm enters, the point is a firm can survive in an economic niche, practicing monopoly pricing (which is, by definition, not providing the best service at a price), and be impossible to dislodge.
But fugu, that's a bald claim. Look, if you say there's such a thing as a tennis ball and I say there's no such thing as a tennis ball, you can hold up a tennis ball and say, "Look, you dope. This is a tennis ball." But if you can't do that, then all you've done is assert something without any substantiation.
You call my claim "wild". I disagree. Find me a case of a company that maintains an economic niche from which it cannot be dislodged where anyone could do a better job. One in which it isn't government leverage or patronage that's keeping it in power. Or crime. Honestly, fugu, this should be easy for you if my claims are so "wild". All you have to do is say, "Acme Widgets." Or whatever.
quote:Originally posted by fugu13: As for why I haven't provided a counterexample, I'm searching for one that you wouldn't just toss because "oh, they're providing the best service" (though I suspect proof of that would not be forthcoming on your part).
You might be right. I might just say, "Who has the right to decide what constitutes 'the best service'?" I might say that if people didn't like the product or the service, they wouldn't be buying it. I might say that if it ain't broke, don't break it.
I could be wrong, but my gut tells me that you're just itching to use Microsoft as an example. If that's the case, then you're wise not to. But like I said, I could be wrong.
quote:Originally posted by fugu13: Of course, since best service is only a meaningful term in the context of a price, what I need to show is a firm practicing monopoly pricing. Firms are notoriously difficult about providing sufficient information to demonstrate that conclusively.
I think that "monopoly pricing" is a bugaboo invented by social engineers. To be perfectly honest.
quote:Originally posted by fugu13: Of course, you seem to have admitted the situation I outlined above could exist, as much as you missed the point. That situation demonstrates a case where a monopoly might exist charging a price creating a deadweight loss in society.
"A deadweight loss in society". Honest to God, fugu, I don't even know what that means. I see the words and I know what each one of them means, but the phrase they make up just doesn't compute.
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I wonder if we'd have transistors today if the trust-busters had gotten to Ma Bell a few decades earlier. Probably not.
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I don't think Microsoft is a good example at all. They may be engaging in some illegal practices, but that's both not for me to judge and not the definition of a monopoly. They do, of course, practice some degree of monopoly pricing (its pretty clear MS couldn't sell more copies of windows at the same price if they produced more; this only occurs if the market is not fully competitive), but even that's gradually breaking down. Also, they're subject to a lot of government interference.
The best (purest) example would be a (very) small town general/grocery store. If the town can only support one such enterprise, one would expect prices in the town to be monopolistic. There's a simple test, of course, compute the marginal cost to the business to offer a good and see if it matches the price. If it doesn't, there's deadweight loss to society.
quote:You might be right. I might just say, "Who has the right to decide what constitutes 'the best service'?" I might say that if people didn't like the product or the service, they wouldn't be buying it. I might say that if it ain't broke, don't break it.
I think this amply demonstrates why I'm not satisfied in putting any example I've found so far to you. The first of your statements would mean no argument is satisfactory, for either position. The second is an essentially irrelevant statement; I'm not disputing that, I'm only talking about efficiencies. The last is fallaciously assuming a lack of breakage; I think market inefficiencies constitute, by their nature, a breakage.
Two of the problems with finding any clear example of this on a large scale are that most markets are competitive (thank god), and governments do interfere, a lot. Most candidate markets have been subject to extremely inefficient regulation, because people have long had feelings about their potential problems, and instigate unfortunate, misguided "solutions".
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quote:Originally posted by fugu13: The best (purest) example would be a (very) small town general/grocery store. If the town can only support one such enterprise, one would expect prices in the town to be monopolistic. There's a simple test, of course, compute the marginal cost to the business to offer a good and see if it matches the price. If it doesn't, there's deadweight loss to society.
See, now, your writing style is completely different from Blayne's, but the content seems awfully familiar.
Are you suggesting that profit somehow takes away from others? Something that they're entitled to?
quote:Originally posted by fugu13:
quote:You might be right. I might just say, "Who has the right to decide what constitutes 'the best service'?" I might say that if people didn't like the product or the service, they wouldn't be buying it. I might say that if it ain't broke, don't break it.
I think this amply demonstrates why I'm not satisfied in putting any example I've found so far to you. The first of your statements would mean no argument is satisfactory, for either position. The second is an essentially irrelevant statement; I'm not disputing that, I'm only talking about efficiencies. The last is fallaciously assuming a lack of breakage; I think market inefficiencies constitute, by their nature, a breakage.
A breakage implies a norm that we're falling short from. What's the norm that you're proposing? There must be something, or you can't even use a term like "breakage".
quote:Originally posted by fugu13: Two of the problems with finding any clear example of this on a large scale are that most markets are competitive (thank god), and governments do interfere, a lot. Most candidate markets have been subject to extremely inefficient regulation, because people have long had feelings about their potential problems, and instigate unfortunate, misguided "solutions".
So I'm going to repeat: Monopolies that are not supported by crime/violence or governmental coercion are nothing to worry about, and breaking them up out of some theoretical opposition to the very concept is criminal.
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You don't know what a deadweight loss to society is? I suggest you retake your introductory microeconomics sequence, or sue the school you took it at.
In the case of the general store, the loss is due to a loss of efficiency. I suppose since you don't know the term deadweight loss you are unlikely to be able to draw the diagram, but basically the producer (the general store) captures some of the consumer surplus by raising prices and reducing quantities, increasing the producer surplus. Doing this, however, results in some of the consumer surplus just disappearing, leading to a net loss to society.
In the case of the general store I don't think there's any need to do anything; the deadweight loss is likely tiny. There is one interesting route the community could take: provide a small subsidy to the general store. Strangely, a subsidy to a monopoly pricer results in more benefits to total surplus than the cost of the subsidy.
Oh, and I've found a very good example, primarily from the paper "The Growth and Impact of the British Water Industry in the Nineteenth Century", by J. A. Hassan, published in The Economic History Review (some details filled in by reading his cites).
For a good while, the British water industry was basically unregulated. There were some local waterworks, but industry deregulation at the beginning of the nineteenth century meant nearly all localities were served by unregulated private companies. Nearly all local markets were small, most of the water industry serving villages, small towns, et cetera. There were a large number of companies, but rarely more than one or two in an area.
As is expected in any system where a firm has the potential to exercise monopoly power, these firms did. Note, there was no regulatory impediment was stopping another firm from entering the same market. In fact, there were some areas where two firms abutted each other -- neither was able to sustain a profit in the overlapping region.
Exactly as is expected by basic microeconomics, particularly with a good having such a steep value curve, the firms kept prices somewhat higher and greatly undersupplied the localities, frequently not bringing water to an area until there were quite a few buildings already erected. They had higher profits than what few municipal works were around at the time or the municipal works that followed.
However, industrial and population growth in much of England was suffering from a lack of water. A bit after mid-century, a wave of municipalization swept the nation, sometimes by granting a particular company certain guarantees of local monopoly in exchange for guarantees of service, sometimes by a town beginning its own waterworks.
The economic benefits to the region were huge, resulting in greatly increased growth, at a small cost to the profits of the water companies (as noted before).
As a side note, I'm extremely amused at you comparing me to Blayne. Your and my two positions are actually extraordinarily similar. However, our ideological bases are not. I'm in favor of markets operating at maximum efficiency through the enforcement of rights regimes (such as property rights) and absolutely minimal regulation in certain extreme circumstances leading to unacceptable deadweight loss; basically Milton Friedman's position. Your position is based on some fairly esoteric concepts of morality.
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quote:Originally posted by fugu13: You don't know what a deadweight loss to society is? I suggest you retake your introductory microeconomics sequence, or sue the school you took it at.
I know the jargon. But we aren't in a lecture hall here, and I think that what matters is things that exist in the real world.
quote:Originally posted by fugu13: In the case of the general store, the loss is due to a loss of efficiency. I suppose since you don't know the term deadweight loss you are unlikely to be able to draw the diagram,
Nice.
quote:Originally posted by fugu13: but basically the producer (the general store) captures some of the consumer surplus by raising prices and reducing quantities, increasing the producer surplus. Doing this, however, results in some of the consumer surplus just disappearing, leading to a net loss to society.
Fugu, you're talking about models. None of which actually reflects reality. Even the jargon makes assumptions that are simply insupportable.
The idea that there's something called "society" which jointly owns all the resources that exist, is silly. People own things. Not some abstract entity called "society". Start with bad premises, you're going to wind up with bad conclusions.
Nor is a general store a "producer" except in the lecture hall. The silly oversimplification of producer/consumer and simple curves with a point of equilbrium is something I first learned in high school, fugu.
Now, what you're calling "consumer surplus" doesn't actually exist. Nor is there any such entity as producer surplus in the way you use the term.
And I don't know if you know how stores work, but they just don't do that. No one reduces quantities and raises prices like that. You order from a supplier what you're likely to sell. You mark things up for sale based on a number of criteria. What general return you want to come away with. Your prospects of being able to order more of a particular item. And so on.
It's all microeconomics, and it's nothing at all like the micro they teach in lecture halls.
quote:Originally posted by fugu13: In the case of the general store I don't think there's any need to do anything; the deadweight loss is likely tiny. There is one interesting route the community could take: provide a small subsidy to the general store.
Good God. Why on earth would they want to do that? Why on earth would a sane shopkeeper accept it? Have you talked this over with Blayne?
quote:Originally posted by fugu13: Strangely, a subsidy to a monopoly pricer results in more benefits to total surplus than the cost of the subsidy.
On paper. Please tell me you don't think the various models they teach in Econ 101 have any real connection with reality.
quote:Originally posted by fugu13: Oh, and I've found a very good example, primarily from the paper "The Growth and Impact of the British Water Industry in the Nineteenth Century", by J. A. Hassan, published in The Economic History Review (some details filled in by reading his cites).
For a good while, the British water industry was basically unregulated. There were some local waterworks, but industry deregulation at the beginning of the nineteenth century meant nearly all localities were served by unregulated private companies.
Wait a second. You're saying that anyone who wanted to could go and set up their own waterworks? That the government would actually permit more than one water supplier in any given locality? I'd like to see that paper, then, because I have a hard time believing such a thing ever happened. And, of course, if that's not what you're saying, then it's irrelevant, because once again, you're talking about government sponsored monopolies.
quote:Originally posted by fugu13: Nearly all local markets were small, most of the water industry serving villages, small towns, et cetera. There were a large number of companies, but rarely more than one or two in an area.
Define "area".
quote:Originally posted by fugu13: As is expected in any system where a firm has the potential to exercise monopoly power, these firms did. Note, there was no regulatory impediment was stopping another firm from entering the same market. In fact, there were some areas where two firms abutted each other -- neither was able to sustain a profit in the overlapping region.
Exactly as is expected by basic microeconomics, particularly with a good having such a steep value curve, the firms kept prices somewhat higher and greatly undersupplied the localities, frequently not bringing water to an area until there were quite a few buildings already erected. They had higher profits than what few municipal works were around at the time or the municipal works that followed.
However, industrial and population growth in much of England was suffering from a lack of water.
So... what, people were just waiting for it to be supplied to them?
quote:Originally posted by fugu13: A bit after mid-century, a wave of municipalization swept the nation, sometimes by granting a particular company certain guarantees of local monopoly in exchange for guarantees of service, sometimes by a town beginning its own waterworks.
The economic benefits to the region were huge, resulting in greatly increased growth, at a small cost to the profits of the water companies (as noted before).
As a side note, I'm extremely amused at you comparing me to Blayne. Your and my two positions are actually extraordinarily similar. However, our ideological bases are not. I'm in favor of markets operating at maximum efficiency through the enforcement of rights regimes (such as property rights) and absolutely minimal regulation in certain extreme circumstances leading to unacceptable deadweight loss; basically Milton Friedman's position. Your position is based on some fairly esoteric concepts of morality.
posted
Who said anything about a society as jointly owning anything? All that's required to illustrate the notion of a deadweight loss is a collection of independently acting individuals. Society in this sense is convenient economic shorthand for "all the producers and suppliers in this market".
Furthermore, we observe deadweight losses, frequently in predictable quantities, all the time (sadly). They're just usually in relation to inefficient government regulation. Modern economic models have significant predictive power in many situations, which is one big reason we keep using them.
Regarding it being truly private, to quote the paper:
quote:During the first four decades of the nineteenth century, parliament "relied on the workings of market forces and the potential of competition to safeguard the public interest."
Specifically, out of 92 localities looked into, only 10 had any kind of municipal water service. The others were only served by wholly private, competing companies. It was only after that period that state-sponsored monopolies sprung up. (Before that period, water service was pretty much purely communal).
"area" == villages, small towns, and closely spaced collections of them.
In areas not supplied by the water companies, the inhabitants typically subsisted on natural water supplies, often going without or enduring significant contamination. Yes, they were "just waiting" for water to be supplied to them. The costs to a company of supplying such areas were high enough to cut into their profit, a course of action they of course avoided.
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It's just that I read so much of this kind of stuff for work that it all blends together after a while.
