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In this video by John Stossel the libertarian economist Daniel J. Mitchell states the following:

Monopolies are almost always a creation of government intervention. 

Capitalism Myths: Part 1

Contrary the wikipedia page on monopoly lists several different mechanisms by which monopolies are created.

Is there empirical research which validates or refutes Mitchell's claim?

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  • $\begingroup$ To answer this question one would (also) have to define "monopoly". Does the holder of a patent on a specific method of rubber production have a monopoly as long as there are other ways to produce rubber, resulting in a similar end product? Does the operator of the sole vending machine at my place of work have a monopoly? $\endgroup$
    – Giskard
    Sep 14, 2022 at 5:33
  • $\begingroup$ Have you tried to ``bing'' the answer? $\endgroup$ Sep 14, 2022 at 7:42

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I do not believe there is any source that would checked every single monopoly for it's origin and compare fraction of monopolies created by state vs naturally occurring ones.

Also, the claim is difficult to validate/falsify as it is very vague. What does "almost always" mean? More than 50% of the time, more than 60% of the time or more than 95% of the time?

This being said, it is often mentioned in textbooks that government is common reason behind creation and existence of monopolies (e.g. see Mankiw Principles of Economics 6th ed pp 313).

Moreover, from casual observation it would be correct to say that most monopolies are enforced by government. For example, copyright system enforced by government gives an author a monopoly on reproduction of their work. According to the U.S. copyright office since 1870 they issued over 30,000,000 copyrights. Another example of government imposed monopoly are patents. According to the Statista just in the year 2020 US registered over 3 millions of patents. Government also creates monopolies in various other ways, but patents and copyrights are probably the most numerous monopolies created by government.

I could not find any statistics on naturally occurring monopolies, but the sheer volume of monopolies created by patent and copyright law is astronomical. I think you would struggle to put a list of 1000-10000 naturally occurring monopolies together throughout the whole human history. Even if there would be million of them it would still be just 3% of the number of copyrights issued just in the US alone.

Nonetheless, given that there is no direct empirical study that would look into this, it would be fair to say that it is very plausible that most monopolies are created by government, but there is no direct evidence to validate or falsify the claim.

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  • $\begingroup$ If you stretch it, almost everything is enforced by government, because private property is. The phone company or water company may seem like a "natural monopoly" - if you forget that the government is the one preventing rival companies from hooking up to the phone lines it laid! $\endgroup$ Sep 16, 2022 at 8:10
  • $\begingroup$ @user253751 i am not stretching it I am literally using textbook definition - see the source I cited. Stretching it would be if I would go beyond textbook definition, but I strictly keep it to what is commonly understood as monopoly by economists $\endgroup$
    – 1muflon1
    Sep 16, 2022 at 8:31
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Alongside with intelectual property, addressed in the answer by @1muflon1, another major source of monopoly nowadays is the posession of utmost scarce natural resources (hydrocarbons, rare minerals...) This, I wouldn't say that are rooted in government intervention. But of course you always can stretch the argument to bring a government into scene. If this is not the case, I would consider this a counterexample, important enough as to discard the proposition that "almost always" there is a government behind any monopoly.

In any case, I find the way of thinking based on a dichotomy of "free" markets versus "authoritarian" governments, always alien to us, more confusing than useful. A mix of market and political rules of behaviour is often the case.

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  • $\begingroup$ It's not much of a stretch. The government is the one who makes it illegal to drill in some other company's reservoir (because that company has a government-issued piece of paper saying it's theirs) $\endgroup$ Sep 16, 2022 at 8:11
  • $\begingroup$ @user253751 :D The government gave you a monopoly on living in the home you own! Bastards ;) $\endgroup$
    – Giskard
    Sep 16, 2022 at 8:47
  • $\begingroup$ @Giskard Actually, my landlord has a monopoly on living in my home. There are companies that own huge parts of some areas - such huge numbers of homes that if they withheld the homes there wouldn't be enough homes - and thus they effectively have monopoly pricing power. $\endgroup$ Sep 16, 2022 at 9:04
  • $\begingroup$ I am knitpicky: this is market power, not monopoly power, but otherwise I get your point! $\endgroup$
    – Giskard
    Sep 16, 2022 at 9:52
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It is hard to answer this question non normatively as there is not really any empirical evidence to back up the statement. However, I look at it this way:


A competitive market has no artificial barriers to entry

if a "monopoly" would have the pricing power to raise prices it would incentivise competition and encourage other firms to enter the market , the competition has now defeated the monopoly.

The only time this natural phenomenon fails to occur is in the face of regulations set in place by the government creating obscene barriers of entry to protect their vested interests in various big businesses.


Therefore it is impossible for a monopoly to exist in a competitive market without a regulatory power creating barriers to entry.

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  • $\begingroup$ What if only I know the secret seven spices to create my amazing sauce that goes so well with fried chicken? Or what if I own the only suitable harbor for ferries in a 50 km radius? $\endgroup$
    – Giskard
    Sep 26, 2022 at 16:04

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