Summary Of The Myth Of Natural Monopoly

The Myth of Natural Monopoly is the title of the article written by Thomas J. DiLorenzo. This article is about the theory of natural monopoly where it is just an economic fiction. Also it is stated to this paper that natural monopoly is not existing monopoly. I think the purpose of the author in writing this article is to know about the theory of natural monopoly and how it exists.
The theory of natural monopoly is just an economic fiction. There is no such thing as a natural monopoly has ever existed. With the help of a few influential economist, and secured government sanctioned monopolies, they constructed a rationalization for their monopoly power. Since the monopolies are natural and since the nature is beneficent, therefore, government was justified in establishing good monopolies.
“The public utilities have been granted governmental franchise monopolies because they are thought to be natural monopolies." The natural monopoly is said to occur when production technology causes long run average total cost to decline while output expands. In other industries, a single producer will eventually be able to produce at a lower cost than any two other producers and that creates a natural monopoly.
Competition is said to be a cause of consumers inconvenience in buying products because it constructed a duplicate facilities. It is stated to
this article that avoiding such inconvenience is a reason offered for government franchise monopolies for industries with a declining long run average total cost.
According to this article, it is just a myth that the natural monopoly theory was developed first by economist and then used by legislators to justify franchise monopolies.
“The truth is that the monopolies were created decades before the theory was formalized by intervention-minded economists, who then used the theory as an ex post rationale for government intervention. At the time when the first government franchise monopolies were being granted, the large majority of economists understood that large-scale, capital intensive production did not lead to monopoly, but was an absolutely desirable aspect of the competitive
process.”
For me, this article is convincing. Even the title of the article is so convincing. Just by reading the title, readers will be convinced to continue reading the contents of the article. I am amazed to the author of this article, who still has the chance to discover the theory of natural monopoly. It is nice reading this article because it is understandable and direct to the point. It’s hard to put up its summary because the contents can’t be summarized or paraphrase due to its already shorten and direct to the point where the readers can easily understand it and can cope up to what the author is talking about.
Yes, I think this article is well research because he really stillhas the chance to see the history of this natural monopoly. The article have a very convincing contents, I can say that everyone can relate to this article, also, I can tell that this can caught the attention of every reader. The author also hassome reputable sources or information from other author that supports or contradicts to the ideas of the author. I think the author hasn’tleaved anything important information. As I’ve said, the author is direct to the point and can be easily understand. Also, the author presented a balanced view of information because he really put those important information even if it supports or contradicts to the authors ideas.
Yes, this article really holds my interest because of the idea that this article is going to discuss about the myths or theory about natural monopoly. Also, as a consumer of those said natural monopolies, I can really relate to the contents of this article. This article is also so simple, where the author used understandable words. No, this article doesn’t bother me. Having an idea that this article is about the myth and theory about natural monopolies, I can easily cope up to the authors contents. The only thing I want to say to the author is that just continue writing articles because through your writing, many people or readers can realized. This article can give knowledge and ideas about natural monopolies, especially those in a franchising business.
I learned from this article that natural monopoly before is just an economic fictions. I’ve learned that franchising business is a natural monopoly. Also, I’ve learned that competition in a business can cause inconvenience to the consumers. From this article, I was reminded about the article monopolistic because they have some similarities in contents. They also tackle about the same kind of business. The only difference is that in monopolistic it tackles about the quality and variety of a good, while here in natural monopoly it tackles about franchising business.