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Milton Friedman on Technology

Libertarian Economist


Private monopoly easier to remove than regulation

In practice, monopoly arises from government support or from collusive agreements, [and should be dealt with via] anti-trust laws. However, monopoly may also arise because it is technically efficient to have a single producer.

When technical conditions make a monopoly the natural outcome of competitive market forces, there are only 3 alternatives that seem available: private monopoly, public monopoly, or public regulation. All 3 are bad so we must choose among evils.

I reluctantly conclude that, if tolerable, private monopoly may be the least of the evils. If society were static so that the conditions which give rise to a technical monopoly were sure to remain, I would have little confidence in this solution. In a rapidly changing society, the conditions making for technical monopoly frequently change and I suspect that both public regulation and public monopoly are likely to be less responsive to such changes in conditions, to be less readily capable of elimination, than private monopoly.

Source: Capitalism and Freedom, by Milton Friedman, p. 28 , Nov 15, 1962

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Page last updated: Jul 06, 2014