The Principles of Economics, with Applications to Practical ProblemsFetter, Frank A. (Frank Albert)
General
The Principles of Economics, with Applications to Practical Problems
Fetter, Frank A. (Frank Albert)
Economics
1. _Monopoly gets its power from political, economic, and commercial
sources._ A political monopoly derives its power of control from a
special grant from the government, forbidding others to engage in that
business. The typical political monopoly is that conferred by a crown
patent bestowing the exclusive right to carry on a certain business. A
second kind is that conferred by a patent for invention, or the
copyright on books, the object of which is to stimulate invention,
research, and writing by giving the full control and protection of the
government to the inventor and writer or their assignees. In this case
the privilege is socially earned by the monopolist; it is not gotten for
nothing. Moreover, the patent is limited in time, expires and becomes a
social possession. A third kind is a government monopoly for purposes
of revenue. In France, the government controls the tobacco trade, and
the high price charged for tobacco makes the monopoly yield a large
income. A fourth kind are public franchises for public service, as
street-railways, lights, gas, waterworks, etc. These are granted to
private capitalists to induce them to invest capital in something which
has public utility.
[Sidenote: Economic monopoly]
Economic monopoly arises when the ownership of scarce natural agents, as
mines, land, water-power, comes under the control of one man or one
group of men who agree on a price. Economic monopoly is a result of
private property that is undesigned by the government or by society. It
is exceptional, considering the whole range of private property, but it
is important. The oil-wells embracing the main sources of the world's
supply have come under one control. One corporation may control so many
of the richest iron-mines of the country as to be able to fix a price
different from that which would result under competition. Coal-mines,
especially those of some peculiar and limited kind, such as anthracite,
appear to become easily an object of monopolization. Economic monopoly
merges into political monopolies, such as patents and franchises.
Private property is a political institution designed to further social
welfare, and only rarely is any particular property a monopoly. Private
control of great natural resources doubtless would have been prohibited
had it been foreseen.
[Sidenote: Commercial monopoly]
Commercial monopoly, variously called contractual, organized, or
capitalistic monopoly, arises where men unite their wealth to control a
market, to overpower or intimidate opposition, and to keep out or limit
competition by the mere magnitude of their wealth. These various kinds
so merge into each other that they cannot always be distinguished in
practice. A patent may help a capitalistic monopoly in getting control
of a market; great wealth may enable a company to get control of rare
natural resources.
[Sidenote: Special classes of monopoly]
Public-domain text, read in full here on John Shaqi.
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