On a simular note, there was a pretty interesting opinion piece in todays Wall Street Journal -
Three Cheers for ‘Creative Monopolies’ by Crovitz
http://online.wsj.com/articles/gordo...&mg=reno64-wsj
The crux of the article is discussion of Peter Thiel and his idea that innovators create a temporary monopoly by moving into a space where no one else is.
Here is an interesting quote -
"He warns against creating products that can be commoditized. “All happy companies are different: Each one earns a monopoly by solving a unique problem,” he writes. “All failed companies are the same: they failed to escape competition.” Example: Google , with its unique search advertising, is worth three times as much as all U.S. airlines combined."
He quotes a Scalia written majority opinion -
“The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful, it is an important element of the free-market system. The opportunity to charge monopoly prices—at least for a short period—is what attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth.”
So, innovative companies, such as Amazon, Google, Paypal and Apple, are monopolies. However, this is neither illegal nor bad.
The article is based on Thiel's new book “Zero to One: Notes on Startups, or How to Build the Future”
Sounds interesting.
As a side note, I would point out that the US practice of granting a patent for just about anything and everything, tends to help innovative companies hold so call creative monopolies for longer than normal. When one can patent the idea of an online shopping cart, that tends to cut back on competition. I suspect that patents are the biggest barrier to entry in many tech markets.