MONOPOLIES ARE EVERYWHERE

15. July 2008, 18:24 | by WD Milner | Full Article |

When we hear the word monopoly what inevitably comes to mind are huge, looming corporations controlling major markets we rely on every day. Well there can be smaller monopolies too. These are what I like to call “effective monopolies” rather than the more narrow legal definition. And these can be found everywhere.

I have been doing some repairs and such around the house and needed an extra piece of moulding. I went back to the building supplier where I had gotten the material originally (with a sample - always take a sample) to find they couldn’t provide any more of it as they had changed suppliers and the new one didn’t carry that particular style/size combination. A trip to a dozen different local supplies had the same result.

What was rather disquieting, the reason no one had any was that they all used the same distributor/manufacturer for their moulding. The moulding distributor enjoys an effective monopoly on the local level - and probably in other localities as well. This effective monopoly means I have the choice of driving to another town to look, having a millwork make up a custom matching piece at 5 times the price it would normally cost, or tear out the material I have already put in and get new moulding so that everything matches. Of course I could use what is available and have one trim section not quite match but that defeats the purpose somewhat.

A similarly situation seems to be developing in the local automotive market, where one single owner has acquired the dealerships for Nissan, Toyota, Kia, and Suzuki, and a local used car dealership. It will be interesting to see if he also attempts to aquire the remaining Asian brands available locally: Hyundi, Subaru, Mitsubishi and Mazda.

Effective monopolies are everywhere, but some are so low key and ubiquitous we just don't even think about them.

Update (2010.03.01): The above referenced owner has now added Ford to the lineup.

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Categories: ,
Keywords: monopoly,business,effective monopoly

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