cliffski wrote:to play devils advocate it also leads to widescale efficiencies of scale.
Only having one rail company is more efficient in terms of scheduling, maintenance etc than having tons of competing ones. The same is true of energy production.
Still not a system I'd like to see though. The potential for government waste, and lack of global competitiveness is a major issue.
Some industries are natural monopolies like public transport, energy production, telecommunications infrastructure, water distribution and the lotteries. The amount of investment required is either too huge for a competitive market to handle, or it’s impossible to create a competitive market without huge public subsidies, or there are negative externalities associated with creating competitive markets like the proliferation of gambling. If a monopoly must exist, I'd rather see it in public hands than private hands, and in the long-run there are no certainties, as technology changes a natural monopoly may disappear.
The purpose of public transport is to take the pressure off the road system. It’s far cheaper for governments to subsidise public transport, than it is to build and maintain extra roads; if public transport did not exist. It is a natural monopoly because it’s not designed to run at a profit. Attempts by governments to split public transport monopolies by creating artificial territories that are then privatised to private providers, just makes public transport more expensive to run, and discourages it.