Monopoly Government

Monopoly may be good or it may be bad, in the sense that human behavior may be good or bad—according to whatever ethical standard we use to measure moral action.

The term monopoly, however, has taken on bad connotations to the point where goodness is rarely, if ever, associated with it. As if behavior were always thought of as misbehavior!

The one-sided evil ascribed to monopoly is so pronounced in most people’s thinking that one is tempted to coin a new term to convey the idea of monopoly in its good sense. But remedying mistaken connotations by inventing new words is, more often than not, a hopeless means of improving communication between people. It may be simpler to correct the mistaken connotations.

According to dictionaries, the term monopoly means "exclusive control of a commodity or service in a given market." Monopoly and exclusive market position are interchangeable terms, so deeply embedded one in the other that they possess semantic inseparability. Thus, there is little choice but to make out as best we can with the word monopoly.

There are two ways to attain an exclusive position in the market, that is to say, there are two ways to achieve monopoly. One way is not only harmless—indeed, it is beneficial; the other is bad. The beneficial way is to become superior to everyone else in providing some good or service. The bad way is to use coercive force to keep others from competing effectively and also from challenging one’s position. Rise above others by excellence, or hold others down by coercive force!

A private monopoly is, in effect, an area contract awarded to a private sector operator. The area may cover an entire urban area or a substantial part of it. See the sections dealing with Area Contract – Net Cost and Area Contract – Gross Cost. If all bus services within a city or urban area are provided by one publicly-owned company it’s a public monopoly.

Major disadvantages of a public monopoly

• Absence of competition often results in poor service.
• Conforming to government guidelines for staff terms and conditions often results in over-staffing with high salary costs.
• As a government agency the operator cannot voice opposition to political edicts even where these are detrimental to bus operations.
• Public monopoly operators are often unable to secure adequate fare increases, or to secure funds for investment in new buses.
• There is a tendency for the operator to become more powerful than the regulatory authority.

A public monopoly should only be considered under limited circumstances

• No private companies are interested in investing in the bus industry.
• An exclusive franchise or operating right to a route or area cannot be enforced.
• Previous attempts to improve the services provided by private sector operators have failed, for reasons beyond the authority’s control. For example, because of criminal activities or failure by government to fulfill its obligations.