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Monopolies In The Market Place: Example Of The Telecommunication Industry

695 words - 3 pages

Federal Regulations on Trade Traditionally many utility industries have been comprised of monopolies. These natural monopolies exist for a number of reasons. Monopolies in the marketplace create great inefficiency, and thus are very undesirable. It is for that, and many other reasons that regulation was thought of as a solution to the monopoly problem. Regulation was not just used to overcome such great inefficiencies created in a monopolistic market, but was also used to supply consumers with necessary goods. A good example of this can be seen in the telecommunications industry. There is a lot of money to be made in long distance telecommunications, while supplying phone service to a small, very economically diverse, rural town on top of Mount Taikonduroga would never prove economical. Thus the local telecommunications service to the small rural town could not sustain itself. The costs to the firm would never be supported by the consumers in that area, and thus to encourage a firm to supply to the town the government must set up a regulatory practice that would ensure a firm to make a reasonable return on their investments. Thus regulation was found to be a solution to such problems. Going back o the example of the telecommunications industry, the huge stranded costs have already been realized and thus the major cost of supplying to the small rural town has already been satisfied. The MC of supplying to the town is rather small, and would supported by the consumer. Besides the fact that technology has come a long way and made many things more efficient. Thus, de-regulating the retail and generation of telecommunications electricity etc. would not lead to market failure. The industries would be able to support themselves. Federal regulations preempt local height limits The Federal Commissions Act and associated regulations preempt a city zoning ordinance limiting the height of radio broadcast towers, the New Hampshire Supreme Court ruled in Koor Communications v. City of Lebanon in December. Lebanon's zoning ordinance allows radio...

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