There can be competition even with natural monopolies – here’s how

So I’ve heard the “natural monopoly” argument by about a million times now by opponents on this sub and elsewhere. Unlike others, I won’t deny it exists – there are certainly sectors where average costs increase with more entrants and the barriers to entry are too high as a result.

However, there’s a solution to this – moving with your feet. Because even if a firm has a monopoly within a certain area, that doesn’t mean it has a monopoly everywhere. Let’s say as an example the country is carved up between 10 utility providers, and there’s free movement between each region. If people don’t like the pricing and quality offered in a certain region, they can move to another region where they prefer what’s offered. So consumers can still choose what’s best for them, with no government intervention necessary.

This way, there can still be competition, even between monopolies. A utility provider still has an incentive to offer a better product because that will maximize his profits. If he doesn’t, people will move to other utility providers.

However, for this to happen, a few conditions need to be met: – homeownership shouldn’t be subsidized or encouraged, because homeowners are less mobile than renters are – there need to be enough providers in a country so collusion won’t be effective and there’s sufficient competition. – in order to maximize mobility and therefore competition, there should ideally be free movement across borders, so people have choice in other countries and states as well – utility providers should be integrated across multiple utilities (water, gas, sewer services etc.) because if you are content with one utility but not with others moving is more complex, it should be an all in package preferably

What are your thoughts?

(PS: Another way to deal with natural monopolies is for them to be corporations that issue equity and then encourage everyone to buy their equity (directly or indirectly) so they profit from the dividends they pay to their owners)