by Handsome Matt
The idea of a pocket monopoly is one that has existed in everything but name for quite a long time. In many cases it is entirely benign and ultimately harmless.
The single grocery store in a small town is a prime example of a pocket monopoly. At the “main street” level of a society there is no other form of competition, and the residents of that city must all shop at said location or find other means. In this situation it is entirely non-harmful to the residents affected by it because it is a simple fact of life. The town is only large enough to support one store.
To give a clear definition of a pocket monopoly it is essentially, the existence of a monopoly that is intentionally locked and defined by some certain parameters, usually geography. Beyond those defining parameters a monopoly does not exist, and the market is competitive.
In a more complex form, a pocket monopoly can and on rare does become financially disastrous.
The most heinous example of this of course is the “company stores” from many Appalachian coal towns. Where the entire town was beholden to a single company that provided everything for them. It was a modern day fiefdom. At the larger national level, there was fierce competition between the coal companies, but again for the individual towns, no such competition existed. When the mines closed, the towns died.
Both of those are very cut, very dry, illustrations that rarely occur anymore. A more convoluted, and I would argue slightly more sinister, form of pocket monopolies do exist.
The best illustration of a modern day pocket monopoly can be found in the text book industry. At the national level, there is fierce competition between textbook publishers, made all the more so, by the dwindling of the market. This dwindling most likely fueled the initial move towards pocket monopolies.
What occurs is simple: A professor or department chooses a specific text to use for their courses. They look at a variety of books from different publishers, and then chose one. That book is the required text for the course and no other text book can be used. A pocket monopoly has been born.
A student can not use a trigonometry book from another publisher for Trig 101, the homework would be wrong, the chapter order different, and ultimately the student would fail. With the questionable practice of shifting towards online homework, even the weak competition of used textbooks is being quickly eliminated.
The price of these textbooks, reflecting the complete lack of competition, have steadily increased in value with little to no increase in quality. It is no surprise now to see prices of $100, $125 and even $200 on certain textbooks. With used books being marginally less expensive.
While there may be several bookstores catering to students, they are all selling the same book, and the difference between the prices is not significant enough to be considered real competition. And this supposed “competition” obscures and confuses the reality that for the student, they are caught in a monopoly.Even with the price reducing nature of the internet, the student must purchase a specific textbook sold by a single publisher.
Used textbooks also confuse the issue. While they provide a minor decrease in price, but those textbooks are only valid so long as that same edition is employed in the class. With publishers releasing new editions every few years, the competitive force that could be applied is checked. In both cases, the competitive force that might be applied has been negated.
There are many reasons for the development of pocket monopolies. In the case of textbooks, it is a combination of factors, including the shift towards viewing academic institutions as businesses, the supposed rise in available money for students, the propaganda surrounding college education, and the fact that many college professors are incapable of actually teaching (For many professors, who are not given any educational training, the textbook becomes a crutch). It is especially evident in the sciences, and it is no surprise then that science and mathematics text books are the most expensive.Compare college text books to those of a grade school. Especially a grade school from a poorer district. The pocket monopoly is broken by the simple fact that those text books are purchased by the school and then used for the next five to ten years. A variety of factors dictate the choice, including cost and quality. The school, because of how much money it is going to spend, is able to leverage a better deal, and benefits from access to the market.The concept of a free market, with sensible oversight, is a solid one and it works incredibly well. From the smallest level to the largest level. Any time competition is forced out or eliminated in an intentional manner, the consumer suffers. Whether that is at the national or state , or even at the campus level.