In the movie District 9, the aliens (prawns) have developed a tremendous addiction to cat food. A Nigerian gangster lives in the prawns’ preserve and has a monopoly on the sale of cat food to the prawns. How can he maintain his monopoly and what barriers are there to entry by other sellers?
Simple: the prawns are not allowed to leave the preserve, so they can’t buy from sellers elsewhere in Johannesburg. Every seller must live near them. Since the Nigerian cat-food sellers are heavily armed, quite literally no competitors can enter the market (the preserve). Some barrier to entry, either natural (economies of scale) or artificial (as in this case, with restrictions imposed on both buyers and potential sellers), is required to enable the monopolist to keep price above average cost. As is so often the case in a monopolized market, the restrictions that generate monopoly power result at least partly from government action.
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“And the monopoly wasn’t controlled by a corporate state, but by a gang”
the corporate state IS a gang
Another thought: The Nigerians in the film also likely acquire the cat food by illegal means, such as liberating truckloads of it elsewhere in the city (think old school American mafia crews and truckloads of cigarettes or TVs). Their cost to acquire the goods, therefore, is very low, another barrier to entry.
I was curious, however, at how the prawns got currency and what it was — regular money or some sort of chit.
Of course, the only reason a criminal gang profits from the deal is because government outlawed the sale of cat food to the prawns.
«There would be markets for food, medicine, energy, entertainment, you name it, whether or not the government told us how it should be run.»
Libertarianism is a developmental disorder. Anyone without it knows that the government handles such things as currency, police, and a justice system.
Without those, all you’ve got for a “market” is bartering bits and pieces, hoping not to be robbed blind every time you go to sleep.
Sorry to ignore the main thread and pile onto Jonathan, but aren’t black markets a form of market that exists DESPITE government? Also, is there a such thing as a guaranteed monopoly under black market conditions?
@12 niczar
seriously, you’ll need to provide a little more in-depth analysis when making such a ridiculous assertion
especially provided that it IS THE STATE that robs everyone blind
why can a currency not be determined by a market (Rothbard has wonderful work on this) … why can’t private security and judicial systems exist (like Iceland ACTUALLY HAD for over 400 years)? … just because you say they can’t exist or work does not make it true
“… the restrictions that generate monopoly power result at least partly from government action.”
More precisely, the restrictions result from *a lack of inhibitive* government action. One of the usual purposes of any government is the protection of its citizens from coercion by violence or threat of violence, either foreign or domestic. The plight of the aliens in District 9 was a result of the failure of local government to protect other vendors from the predations of the Libyans, and also of its failure to regard the aliens themselves as deserving such protection.
It seems to me that this argument could be generalized to all systems where a monopoly emerges. The government’s primary task is to regulate the expression of power (social, political, economic, and so on) within its state. Any excessive concentration of power within the nation is a threat to the government’s ability to perform this regulation. The formation of a monopoly indicates a failure of the government to anticipate and prevent this concentration of power.
Not to be counter-contrarian, but I think that @johnathan means that most economies are under the “effects” of “some “government” action ,either directly through regulation and intervention, or indirectly, as the effects of such direct action will at some point, in some way, affect other markets. But, do they exist ‘because’ of government action? In their current form they do, I suppose. Also, quite meaningless or at the very least obvious.
On the other hand there’s the clumsy last sentence in the article that barely disguises a preference for unregulated markets by citing a totalitarian fiction as illustration. Duh.
JV.: No regulation, or restrictions on trade = No black market. Which is fine, I guess, if you can tolerate a bit of antifreeze in your toothpaste.
Governments tend to be monopolies of the means of enforcing economic laws and marketplace regulations because they are also a monopoly on the means of violence, which must be maintained at all cost, whether at war or not ( see Eisenhower farewell speech.) So the government has a national security obligation to keep a stable marketplace. Therefore any government regulated/run/controlled market/economy is somewhat comparable to a totalitarian economy with total government control over the market. It seems a matter of degree whether you’re trading in a totalitarian monopoly or a thoughtfully regulated market that keeps the flow of goods to where they are needed.