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Originally Posted by Thematic-Device
Except we're facing a commodity which by its nature needs to be regulated due to an incredible inelasticity in the demand for it and an inherent monopoly.
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I disagree. The demand for water utlites is more elsastic than you think. If a water utility starts to charge monoply prices, consumers have a few options. First, they could have a well dug. Or, they could buy bottled water. Or they could have a tank of water that is filled every week or so.
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No thats not my contention. My contention is that the idea that the market will solve everything is ludicrous, and is not proposed by any actual economists, or decent economic textbooks. The market does a lot, but there are many different cases of exceptions.
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This is not true. There is a small cadre of economists that do believe that the market can solve everything. If you want, you can go to
Ludwig von Mises Institute Home. My two favorite are Hans Hoppe and Walter Block. Both of these men are economists, both have tenured positions, and both are anarchists. These two men only scratch the surface.
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When it comes to water firms you quite literally have firms which, if unregulated, could enforce their monopoly with an iron fist, and raise prices in some areas of the nation, arbitrarily, to whatever they want because of the high inelasticity in demand.
Monopolies do not produce goods according to where demand equals supply. They never have, and the never will. They produce goods where Marginal Cost equals Demand. This creates a gap, and is a less then optimum equilibrium.
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Why must water be a monopoly? If water is charging high prices, competitiors will enter the market and fill the gap.