I have another idea: if the mere existence of a competitor makes a monopoly drop prices all the way from monopoly price (way above break-even) to below break-even (necessary to crush the competitor), maybe the government should be selling some monopoly-prone goods at break-even. It would be very profitable for consumers and cost almost nothing.
They wont have to go below break-even to crush the competition due to the additional benefits of scale; there are things the incumbent will be able to afford to do that an upstart couldn’t.
By what mechanism do you decide who runs the government-owned monopoly-prone productions, and why shouldn’t it be a (bidding?) market with price commitments.
Whenever you propose a state-run alternative, you need to think about how they reliably hire competent people to run them. Can they ever really beat a mechanism that allows unknowns to step up and depose the incumbent the moment they can demonstrate that they can provide a more desirable product at a competitive price, because that seems like a pretty cool feature to me.
Now I feel a bit silly, because my comment wasn’t a new idea at all, but rather the reason why public utilities exist. So maybe looking at their history and performance is the best way to answer your questions.
I have another idea: if the mere existence of a competitor makes a monopoly drop prices all the way from monopoly price (way above break-even) to below break-even (necessary to crush the competitor), maybe the government should be selling some monopoly-prone goods at break-even. It would be very profitable for consumers and cost almost nothing.
They wont have to go below break-even to crush the competition due to the additional benefits of scale; there are things the incumbent will be able to afford to do that an upstart couldn’t.
By what mechanism do you decide who runs the government-owned monopoly-prone productions, and why shouldn’t it be a (bidding?) market with price commitments.
Whenever you propose a state-run alternative, you need to think about how they reliably hire competent people to run them. Can they ever really beat a mechanism that allows unknowns to step up and depose the incumbent the moment they can demonstrate that they can provide a more desirable product at a competitive price, because that seems like a pretty cool feature to me.
Now I feel a bit silly, because my comment wasn’t a new idea at all, but rather the reason why public utilities exist. So maybe looking at their history and performance is the best way to answer your questions.