Monopolies and Patents

"I'm the only caterer in town."
--Caterer (The Flintstones, Season 5, Episode 4)

Most people intuitively oppose monopolies. Monopolies constitute situations where there is only one provider of a particular good or service. People oppose monopolies because there is no competition that drives efficiency and improvement. As such, monopolists can curtail production and charge higher prices than they otherwise could in competitive environments. Consequently, prosperity is hindered.

In unhampered markets, monopolies are incapable of existing for long periods of time. A lone producer that profits from monopolistic practices attracts other producers who subsequently increase supply and lower price. As competition increases, all producers are motivated to improve productivity, thereby providing more goods to consumers at lower prices and enhancing prosperity.

Monopolies can only persist in markets that have been hampered. Regulations and other mechanisms forcibly restrict entrepreneurial entry into concentrated industries, thereby preserving the monopolistic positions of incumbents.

It is curious, then, to observe many people who oppose monopolies simultaneously support patents and other forms of 'intellectual property.' As these pages have discussed, intellectual property is not property at all, in part because it fails to meet the scarcity test. Instead, patents et al are government granted monopolies that restrain exchange and use of ideas. As noted here, patents clearly restrict production and innovation.

Instead, patents encourage monopolies and cronyism--the very opposite of free enterprise.

Supporters of patents and other forms of intellectual property are supporters of monopolies--most likely those that their supporters believe could be a source of personal privilege.