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What are the pros and cons of monopolies?
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Monopolies reduce entrepreneurial activity

Rising product market concentration leads to a collapse in entrepreneurial activity
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The Argument

Monopolies erect barriers to entry in their industry. These may be regulatory, through high switching costs. For example, ratings agencies are a duopoly, and they have pushed for regulatory backing for their existence (NRSRO status) and then have actively lobbied to preserve this status. Microsoft, for example, made it very difficult to uninstall Microsoft Explorer when they were competing with Netscape. Bloomberg makes customers sign two year contracts to use the terminal and makes it very hard to quit. While each industry is different, rising product market concentration has led to a collapse in entrepreneurial activity across almost all sectors of the United States economy, as Ryan Decker and others have documented.

Counter arguments


Rejecting the premises


This page was last edited on Monday, 20 Jan 2020 at 15:54 UTC

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