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Damn Those Innovative and Cost-Cutting Monopolists!

Posted By Don Boudreaux On July 12, 2011 @ 12:08 pm In Competition,Complexity & Emergence,Innovation,Standard of Living | Comments Disabled

In preparing some of my letters-to-the-editor for publication in book form, I ran across this one, to the Washington Post, that I somehow failed to post here at the Cafe back when it was first written in February of last year:

Barry Lynn complains that Reagan-era easing of antitrust regulations has resulted in oppressive monopolies: “The seemingly endless variety of products in our stores is controlled by an ever smaller number of immense trading companies that, increasingly, charge us higher prices” (“American small businesses needn’t go extinct [1],” Feb. 21).

Mr. Lynn’s reasoning and facts are shaky.

First, true monopolists – having no need to attend carefully to consumers’ desires – don’t bother offering an “endless variety of products.”

Second, as a quick perusal of Table 3 [2] in the attached document from the Bureau of Labor Statistics will show, inflation-adjusted prices of a great many goods and services are today lower than they were 25 years ago.  The real price of household furniture, for example, is down 43 percent over the past quarter-century; that of household appliances is down 64 percent; that of tools and hardware is down 60 percent; that of new cars is down 36 percent; that of apparel is down 46 percent; that of nonprescription drugs is down 54 percent; and – get this! – the real price of information technology, hardware, and services is down a whopping 96 percent.

Sincerely,
Donald J. Boudreaux

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[1] American small businesses needn’t go extinct: http://www.washingtonpost.com/wp-dyn/content/article/2010/02/19/AR2010021902043.html

[2] Table 3: http://cafehayek.com/site/wp-content/uploads/2011/07/Table-3.pdf

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