Dividing electric generation makes sense only if every firm can use the same lines for delivery. Dividing a city in separate areas makes much more sense. That’s duplicating all the costs with only the hope of a fraction of the return. It simply makes no sense for multitudes of cable companies to run lines to the various homes on a street. The same problems exist today as they did when monopolies were formed in the 1900s. And competition, once the monopoly has been opened up as also true in much of the utility industry, shows that the imagined savings from opening an industry to competition is often illusory. The pay scale for executives at a utility company, for example, runs a tiny fraction of those in the private sector. Theoretically, the regulators ensure that the monopolies get back just enough in profit to keep the companies going. As said above, all monopolies exist under regulation, either from the state’s Public Utilities Commission or equivalent or a Federal Independent Agency, like the FCC. Only a few monopolies were created at the federal level, mail service, radio and television most prominently. Others, like telephone and telegraph services and later cable and mobile phones, were given franchises that guaranteed them a set return although they had to provide service to everyone who wanted it regardless of the cost to do so. Later, cities found the corruption so overwhelming that - sometimes to try to guarantee some semblance of efficient service, sometimes to bring the corruption in house - they established their own departments: police, fire, water, sewer, streetcars, electricity, gas, and others. States began chartering companies to provide certain services, from running turnpikes to building canals to supplying water, with exclusivity built into the charter. If you go back far enough you find competing private fire companies so intent on beating the others to get the fees for putting out a fire that they would each sabotage the rest en route and let the building burn. A half dozen electric companies would put up separate poles and lines along a street to serve their customers. A city might have service from a half dozen railroads serving a half dozen separate stations with no means of transferring between them. No industry started out as a monopoly in America. But just recently a new company came in with the hook of being a “green” taxi company (that runs Priuses) and the PSC eventually let them open up because being a “green” taxi company is apparently a different service than being a normal taxi company. We had only one company in town (with notoriously poor service) but nobody’s ever been able to open a competitor because the PSC guaranteed them a monopoly. Usually the trade off for this is that the government guarantees them a monopoly and doesn’t let any other companies enter the market.Īn example of this is that in my town for some reason the taxi service is regulated by the public service commission. In these cases, they are usually regulated by various government commissions (there’s usually a Public Utility Commission) that they have to run any rate or service changes by. Things like public utilities and railroads are monopolies simply because it’s often not practical for other companies to spend the large amount of money on infrastructure to compete in smaller markets.
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