One of the commenters on my recent Investor’s Business Daily op-ed argued that if antitrust law were abolished,
we’d ultimately regress to the big monopolies we had a century or so ago. Those big monopolies were a problem, to say the least. Monopolies are good only for the monopolizing entity and they are bad news for everybody else . . . .
I’m here to say that the widespread fear of monopolies is based largely on historical myths. My colleague Alex Epstein has written extensively on what is generally regarded as the biggest, baddest granddaddy of all monopolies: Standard Oil. If you’re troubled by scary notions of what might befall the consumer on a free market without antitrust laws, you should read his article, “Vindicating Capitalism: The Real History of the Standard Oil Company.”
I can’t repeat all the factual documentation Alex assembles, but here’s a passage that summarizes an important point:
The fact that Standard Oil faced such stiff competition and was driven to expand output and lower prices even further demonstrates the myth of Rockefeller’s “control” of the market. Markets are not possessions that one can acquire or control. They are dynamic, evolving systems of voluntary association, in which competing producers have no ability to force customers to buy their product, nor any ability to prevent others from offering their customers superior substitutes. The expression “control a market share,” translated into reality, means simply that at a given time one has persuaded a given group of individuals to buy one’s product—a state of affairs that can quickly change if someone offers a superior substitute. Read the rest of this entry »