- 09 Jul 2013 23:46
#14268627
The London Underground is not one underground. It is a network of underground railways each one built by private and independant companies.
The London Underground was natiionalised after the war.
All the railways were bought out and monopolised by the govt.
So in the example of the London Underground we can see that it was not a natural monopoly. It was a forced sale.
In its natural state it was a group of competing railway companies. They each built their respective parts of it.
The Northern line. The Cricle Line and so on. Each line built and operated by a different company, all built at different times.
The London Underground is not only in direct competition with bus providers, taxi cabs and cyclebanks..it's also in competion with motor car companies and bicycle companies.
And even (gasp) other rail companies. Overland for example.
But this is not all the competition it faces. It also faces competition for the investment money.
If someone else has a better idea for the same money (or if the idea is not a very valuable one).... it never gets built in the first place.
So it not only has to be a good idea, it has to be considered the best idea available at the time by the people who stand to lose from it.
Under a centralised government scheme, this same decision is made on everyones behalf by someone who doesn't stand to lose from it.
The same decision has not undergone anything like the same level of scrutinty it has if it has had to convince every single individual investor, and the investment made does not have the direct and explicit agreement of all those who stand to lose from it. It does not have the same moral authority.
As part of the government monopoly the London Underground now faces natural competition from a different source.
It must now compete for it's budget with upgrades for the sewer systems, or road systems, or new jet fighters, EU payments, winter fuel bonuses etc.
Kapanda wrote:Eran, can you expand on how certain public transportation systems are not natural monopolies? Eg, who else would compete with the London Underground? Buses and cars are a different sort of transportation altogether - like laptops and desktops.
The London Underground is not one underground. It is a network of underground railways each one built by private and independant companies.
The London Underground was natiionalised after the war.
All the railways were bought out and monopolised by the govt.
So in the example of the London Underground we can see that it was not a natural monopoly. It was a forced sale.
In its natural state it was a group of competing railway companies. They each built their respective parts of it.
The Northern line. The Cricle Line and so on. Each line built and operated by a different company, all built at different times.
The London Underground is not only in direct competition with bus providers, taxi cabs and cyclebanks..it's also in competion with motor car companies and bicycle companies.
And even (gasp) other rail companies. Overland for example.
But this is not all the competition it faces. It also faces competition for the investment money.
If someone else has a better idea for the same money (or if the idea is not a very valuable one).... it never gets built in the first place.
So it not only has to be a good idea, it has to be considered the best idea available at the time by the people who stand to lose from it.
Under a centralised government scheme, this same decision is made on everyones behalf by someone who doesn't stand to lose from it.
The same decision has not undergone anything like the same level of scrutinty it has if it has had to convince every single individual investor, and the investment made does not have the direct and explicit agreement of all those who stand to lose from it. It does not have the same moral authority.
As part of the government monopoly the London Underground now faces natural competition from a different source.
It must now compete for it's budget with upgrades for the sewer systems, or road systems, or new jet fighters, EU payments, winter fuel bonuses etc.