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In Dr. Bylund’s talk about monopoly power, he first defines a monopoly as “one seller”. He then continues to explain his argument of how monopoly power is not a bad thing. Bylund uses the example of new inventions and how someone who makes a new product technically has a monopoly and says this is not a bad thing. If we took away monopolies new things would never be invented because the first person to invent something technically has a monopoly on that product until other people compete with their own rivaling product.
The next example he uses is the phone industry. We started with Lan lines and then moved to flip phones and smartphones. Lan lines worked for a while until someone invented the flip phone. When the flip phone was invented technically the inventors had a monopoly on the flip phone until other entrepreneurs decided to invent their own version. Everyone wanted flip phones because we valued them higher than Lan line phones forcing other entrepreneurs to join the flip phone industry and move away from Lan lines because they were becoming obsolete. The same thing happened going from flip phones to smartphones because people valued the smart phone higher than the flip phone forcing competitors to rise. In my opinion, the initial “monopoly” that the inventor has over their product is a good thing because it forces other entrepreneurs to make a competing product which in turn forces the inventor to improve their product to have an edge over the competitors. This process continues and the consumers will get an improved product because of the competition in that industry.
Bylund goes on to explain the theory of having a total monopoly and what would realistically happen. In theory if you have the monopoly on a product, you can charge a much higher price since you are the only seller for the product and there are no competitors and if people want that product, they must buy from you. However, if you do jack up the price, it is then inviting other companies to come in and undercut the monopolist with a similar product at a lower price because they still make money since everyone would shift from whoever previously had the monopoly because there is another much cheaper option. Overall because it requires only one competitor, any company who could have a monopoly is stopped from charging severely high prices. When Dr. Bylund explained this in the video, it really made sense to me and showed me how monopolies can be stopped and why there are not really any huge monopolies. His points made a lot of sense in the argument and the examples were a tremendous help for me.
For companies that actually do have monopoly power like utility companies, there really is no competitor option because of the monopoly the government has given them. Another example is hospital where all the hospitals in the area must agree that there is a need for another hospital for a new one to be built. In these industries, there is monopoly power because there are regulations that the government has in place.
Dr. Bylund next talks about antitrust and how this plays a role in everything. Antitrust is when the government goes in and breaks up a company because it has grown too big and powerful. His idea is to lower the barriers and encourage more entrepreneurs to join that industry and try it by showing that the business is really that impressive. This would cause competitors and maybe even make these large companies disappear because of the competition. The overall way to measure a company is not by the size of that company but by the value of the company to its consumers.
The next argument brought up is how large businesses in a certain industry buy out all the smaller businesses. Dr. Bylund’s counterargument is that these smaller companies can continue to enter the industry and gain money from being bought out by the large company continuously. This is not a problem. The problem begins to arise when there are barriers to the entry of an industry and only a few small companies are able to enter the industry to then be bought out by the large company. The small companies can decide how much they are worth and if they do not feel like the large company is paying them enough to sell themselves over to them, they can continue to grow in that industry and be a serious competitor to the large company.
Overall, Dr. Bylund has great counter arguments to every argument against monopolies. His main argument is that they really are not such a terrible thing and how there are ways to keep monopolies from starting and rising. This is why he is not afraid of monopolies taking over certain industries because there will always be competition. Competition is essentially the main thing keeping monopolies out of every industry. I really enjoyed his lecture and I personally agree with his counter arguments to the questions people were asking. At first from their question, I thought there was really no solution and that a monopoly would have power in that certain instance, but his counter argument showed me that there is almost always a way to keep companies in check from becoming monopolies.