Not at all. The natural end state of an unregulated market is monopolies. As demonstrated again and again throughout US history, with only anti-trust regulation bringing the monopolies to an end.
How so? When competition can merely be purchased, why wouldn't the larger company do so? Or if the competitor doesn't want to sell, the larger company can undercut them until they're forced to sell or exit the market. No government required for either tactic, and there are plenty of examples of both occurring in US history. For example, Standard Oil, which was formed when about 40 smaller companies joined forces.
Another place where monopolies take root with no state input is when there's a large barrier to entry, such as with railroads. The cost (and justifying the cost to investors) is too much for most companies to even break ground, let alone complete. For example, Bell System, which owned the copper in the ground and the equipment producer Western Electric.
Now then, of course a state can and do also raise the cost of entry for new competitors - but then we're going to be talking about a regulated market.
Unregulated markets tending to monopolies means that markets require regulation, not that a monopoly is a market.
Unregulated markets are not the "natural" state of a market, and not the meaning of a "free" market. A free market is one in which there is competition and new agents are able to enter the market, not ones where there is no law.
Wikipedia and the American Heritage Dictionary expressly disagree:
"In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any other external authority."
JumpCrisscross|1 year ago
Not at all established. Monopolies require strong states to exist.
falcolas|1 year ago
How so? When competition can merely be purchased, why wouldn't the larger company do so? Or if the competitor doesn't want to sell, the larger company can undercut them until they're forced to sell or exit the market. No government required for either tactic, and there are plenty of examples of both occurring in US history. For example, Standard Oil, which was formed when about 40 smaller companies joined forces.
Another place where monopolies take root with no state input is when there's a large barrier to entry, such as with railroads. The cost (and justifying the cost to investors) is too much for most companies to even break ground, let alone complete. For example, Bell System, which owned the copper in the ground and the equipment producer Western Electric.
Now then, of course a state can and do also raise the cost of entry for new competitors - but then we're going to be talking about a regulated market.
epistasis|1 year ago
Unregulated markets are not the "natural" state of a market, and not the meaning of a "free" market. A free market is one in which there is competition and new agents are able to enter the market, not ones where there is no law.
falcolas|1 year ago
"In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any other external authority."