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Wednesday, November 26, 2003
Lessig on municipal ownership of businesses that work out to be natural monopolies - like fiber networks. Does this make sense?
Well - remember that, as Warren Buffett has argued, local newspapers and radio stations can be natural monopolies as well - because of weak network effects (like advertising economies). Should this rule apply to them too? Judging by the quality of most local papers, maybe it should.
Furthermore Lessig argues "most economists would leap from the premise of a natural monopoly to the conclusion that such a monopoly must be regulated". This isn't necessarily true - for instance, there are economic solutions to natural monopolies, like access pricing. They just never work.
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