Reply To: Social harm of monopoly


The force of the Austrian argument is that no matter the conditions of the market, each entrepreneur behaves in exactly the same way. Therefore, the social consequences of their actions are the same. Every entrepreneur, regardless of market conditions, asks a price that maximizes the revenue from sales (this is the unit elastic point on demand for his product). Every entrepreneur, regardless of market conditions, has a cost structure that is bid up to the point of earning just the interest rate of return. If an enterprise is profitable, then outside investors will bid more intensely for its assets (including share of its stock if it’s a public company). this bids up the opportunity cost for the entrepreneur to continue to use these assets in his production. So price is never permanently above MC, when opportunity cost is considered. There are no monopoly profits.

Take a look at Murray Rothbard on monopoly in chapter 10 of Man, Economy, and State:

Ludwig von Mises makes the same point in chapter 16, section 6 of Human Action: