Coercive monopoly

In economics and business ethics, a coercive monopoly is a firm that is able to raise prices and make production decisions without the risk that competition will arise to draw away their customers.[1] A coercive monopoly is not merely a sole supplier of a particular kind of good or service (a monopoly), but it is a monopoly where there is no opportunity to compete with it through means such as price competition, technological or product innovation, or marketing; entry into the field is closed. As a coercive monopoly is securely shielded from the possibility of competition, it is able to make pricing and production decisions with the assurance that no competition will arise. It is a case of a non-contestable market. A coercive monopoly has very few incentives to keep prices low and may deliberately price gouge consumers by curtailing production.[2]

Coercive monopolies can arise in free market or via government intervention to institute them.[3][4][5] Some conservative think tanks, such as the Foundation for Economic Education, define coercive monopolies solely as those established by the government or via the illegal use of force, excluding monopolies that arise in the free market.[6]

  1. ^ Greenspan, Alan, Antitrust Archived 2005-12-17 at the Wayback Machine, in Capitalism:The Unknown Ideal by Ayn Rand. Also The Question of Monopolies Archived 2005-10-24 at the Wayback Machine by Nathaniel Branden defines and discusses coercive monopoly.
  2. ^ Kudlow, Lawrence, The Judicial Hacker, in Jewish World Review (June 14, 2000)
  3. ^ Hasnas, John (1998). "The Normative Theories of Business Ethics: A Guide for the Perplexed". Business Ethics Quarterly. 8 (1): 19–42. doi:10.2307/3857520. JSTOR 3857520. S2CID 44030310.
  4. ^ Bejesky, Robert; Valle, Orlando (2002). "Consumer Welfare and the Sherman Antitrust Act: Reflecting on the Microsoft-Netscape Browser Competition". Thomas M. Cooley Law Review. 19: 37.
  5. ^ Lung, Jonathan (2012). "Ethical and legal considerations of reCAPTCHA". 2012 Tenth Annual International Conference on Privacy, Security and Trust. pp. 211–216. doi:10.1109/PST.2012.6297942. ISBN 978-1-4673-2326-0. Retrieved 2023-12-28.
  6. ^ Richman, Sheldon (2012-06-27). "Can Mutually Beneficial Exchanges Be Exploitative? | Sheldon Richman". fee.org. Retrieved 2022-03-09.