The reductio ad absurdum of your argument is that we should create the conditions for just one company in each market to make all the profit, so that people are motivated to create new companies in case they are lucky enough to create the single one that makes all the profit.
You completely ignore the other downsides of monopoly, such as shutting out competitors who could create even more awesome products than the monopoly company if the market structure allowed for it.
You ignore the potential for monopolies to become worse over time: maybe they started off awesome, but if they're a monopoly they can afford to rot, without any competition to keep them healthy (e.g. Google).
You ignore the other obvious arguments about why directly driving down prices to marginal cost is much worse than doing it indirectly. Directly doing it would be a huge bureaucratic challenge and involve direct intervention in pricing, which sets a terrible precedent for the economy more broadly. Simply blocking a merger doesn't have these problems.
Clear rules about what anti-trust regulators can and can't do (can block mergers, can't implement direct price controls), provide economic certainty and stability, incentivising the creation of new firms.
This can't really be a serious argument, given that you've ignored all these obvious counterpoints.
If you value a theater ticket at $9 and they sell you one at $9, your consumer’s surplus is 0. If they could have sold you a ticket for $5 (but they don’t sell you one at all) and still broken even, the foregone consumer’s surplus is $4. Of course, by their not selling you a ticket at $9, they are foregoing $4 of *producer’s surplus*.
One aspect of monopoly that I don't think you addressed is how a monopoly may act to drive competitors out of business to maintain their monopoly. For example, a large hardware store that is the only one serving a large area that marks up its products more than necessary, finds that a new competitor is opening its doors nearby. The big store immediately drops its prices on enough items that the competitor (who is usually operating on narrow margins to get started) cannot earn enough to pay the bills, and shortly goes out of business, at which point the monopoly raises its prices again, perhaps even higher than before. The lower prices consumers pay during this process is beneficial to them, but temporary, and not beneficial in the long term.
Of course, monopolies have also been known to use stronger tactics to threaten competition, paying off the local officials to keep them from providing equal protection of the law, but I don't know of a reasonable solution to this problem.
The reductio ad absurdum of your argument is that we should create the conditions for just one company in each market to make all the profit, so that people are motivated to create new companies in case they are lucky enough to create the single one that makes all the profit.
You completely ignore the other downsides of monopoly, such as shutting out competitors who could create even more awesome products than the monopoly company if the market structure allowed for it.
You ignore the potential for monopolies to become worse over time: maybe they started off awesome, but if they're a monopoly they can afford to rot, without any competition to keep them healthy (e.g. Google).
You ignore the other obvious arguments about why directly driving down prices to marginal cost is much worse than doing it indirectly. Directly doing it would be a huge bureaucratic challenge and involve direct intervention in pricing, which sets a terrible precedent for the economy more broadly. Simply blocking a merger doesn't have these problems.
Clear rules about what anti-trust regulators can and can't do (can block mergers, can't implement direct price controls), provide economic certainty and stability, incentivising the creation of new firms.
This can't really be a serious argument, given that you've ignored all these obvious counterpoints.
"Laissez faire et laissez passer, le monde va de lui même !"
Leave it alone. The world runs by itself!
If you value a theater ticket at $9 and they sell you one at $9, your consumer’s surplus is 0. If they could have sold you a ticket for $5 (but they don’t sell you one at all) and still broken even, the foregone consumer’s surplus is $4. Of course, by their not selling you a ticket at $9, they are foregoing $4 of *producer’s surplus*.
One aspect of monopoly that I don't think you addressed is how a monopoly may act to drive competitors out of business to maintain their monopoly. For example, a large hardware store that is the only one serving a large area that marks up its products more than necessary, finds that a new competitor is opening its doors nearby. The big store immediately drops its prices on enough items that the competitor (who is usually operating on narrow margins to get started) cannot earn enough to pay the bills, and shortly goes out of business, at which point the monopoly raises its prices again, perhaps even higher than before. The lower prices consumers pay during this process is beneficial to them, but temporary, and not beneficial in the long term.
Of course, monopolies have also been known to use stronger tactics to threaten competition, paying off the local officials to keep them from providing equal protection of the law, but I don't know of a reasonable solution to this problem.