In the many discussions about state v.s. free market on this forum, the one thing I keep running across is people claiming how if someone establishes a monopoly in a libertarian society, then everyone else in that market is screwed. Their reasoning is that anyone else trying to enter the field will get kicked out by the established monopoly. Recent example was oil companies (
https://bitcointalk.org/index.php?topic=47747.msg568485#msg568485), where the claim is that starting your own oil company is now impossible, because established oil companies now have too much control over oil.
The mistake I keep seeing over and over and over (and over and over) is that people seem to think there is only one way to destroy a monopoly, which is to create a more competitive business in the same market. There are actually two ways:
Outcompete the monopoly in their own market
OR
SUBSTITUTIONSIf a company has a monopoly on ALL soda (Coke, Sprite, 7-UP, etc) and prices go up too high, people
substitute with drinking milk or juice.
If a company has a monopoly on all operating systems, people can
substitute with built-in application platforms, like running Google Docs or Chrome apps on PCs regardless of the OS installed.
If a company has a monopoly on electricity (common, with public utilities being only options for running wires), people
substitute by reducing power usage, buying generators, or using their own solar and wind generators.
If a company has a monopoly on cable TV, people
substitute by buying satelite, or buying internet, only, and streaming TV through Hulu/Netflix.
If a company has a monopoly on oil, people can substitute by switching to natural gas, ethanol, or electric.
There once were monopolies on trains, typewriters, telephones, televisions, and a slew of other stuff, much of which we don't even use anymore. They were all killed by substitutions.
So, next time you want to bring up a point about how a monopoly you are thinking of is entrenched and can not be replaced by someone else selling the same stuff, PLEASE stop, remember the word "
substitution," think, and see if there is anything else that people can use in place of that monopoly's product.