The term monopoly means one seller. Actually describing monopoly power is harder to describe than that and it is not necessarily a bad thing. An innovator is essentially a monopoly until other people start competing with it because he is the only one who can provide the service or product that he innovated and innovation is not a bad thing. So monopolies are not necessarily bad or good, it comes down to the power part of a monopoly power. The innovator makes something new to satisfy a consumer want or need and he becomes a monopoly until competition arrives, and making something new and having innovations is good. He uses the example of Apple and how when they first came out with the iphone they had a monopoly on iphones so they had all the power. They could charge whatever they wanted pretty much because there were no other options for iphones. However, people could still buy flip phones; so there were still options, just not for smartphones. After a while though, there were other options for smartphones, so Apple had competition and consumer preference for flip phones went down.
The power in monopolies comes mostly from consumer preference. If the people who are buying the product don’t think the product is worth the price then they will go to a different option even if that product is not as good quality and then the monopoly does not have any power. If the product is well priced and better, then the consumers will prefer that and the monopoly has power. There are two ways to compete in a market; you can either do the same thing as someone else, but do it cheaper. Or you can do something different that is more valuable. It starts out as an innovator providing a new service and he is a monopoly. Then more people enter that market and add competition by changing the price or changing what they are doing. Then if someone makes their good or service more valuable then no one else can compete and they have a monopoly and that is an efficient system. If that one monopoly then starts to make prices too high, then no consumer will want to buy it and they will move to someone else who enters the market and is selling the same thing for a lower price. The thing that stops monopolies from making prices too high is the threat of potential competitors. If there is a company that is a monopoly and other people or companies are not allowed to enter that market then the monopoly can raise prices without consequences, and they have monopoly power because no one can compete with them. Monopolies are natural and just describes how many businesses there are. The power is the problem; you don’t have power because you are the only one, you have power because someone is keeping others out of your market. If no one keeps people out of a certain market, then monopoly power does not arise. Antitrust laws are for stopping certain businesses from getting too powerful, but they only get powerful because of the government helping them out. So instead of doing that, he thinks they should just lower the barriers and allow people to compete with them. He seems to think that the government is not good for markets (or at least some of them) and that it is pretty much the only reason that monopolies are able to gain power. Small businesses being bought by big businesses is often thought of as a problem, but it is not necessarily a problem. The service that is being provided is still there even after the company is bought and the value of the service is still there so it doesn’t affect the consumer at all, it only affects the businesses and oftentimes the small business is being made just to get bought. Small businesses can keep entering the market because there are no barriers to entry and they keep getting money when the big company buys them out. The only problem is when there are barriers to entry. Barriers to entry are the main part of monopoly power, if you stop people from entering the market then you give the monopoly power. Even though all industries are regulated, it depends on whether the monopoly is there because of the regulation or not. There might be some good reasons for having regulations or restricting entry to some people or for some other reasons, but you need to make sure the resultant power is worth the restrictions and regulations.
