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Comment by unusximmortalis | Hacker News Reader

Free markets, heh?

Funny you should say that, given that oil is the classic example of a market controlled by a cartel of non-free governments.

Oil cartels can exist without government intervention, the free market does not guard against collusion.

Collusion and Monopolies are the greatest enemies of a free market. Collusion and Monopolies = secretive agreements to limit Free Markets.

Collusion and Monopolies happen all the time. The number one defender of Collusion and Monopolies seem to be mos tLibertarians.

That's a mischaracterization. Many libertarians believe that perpetual monopolies cannot exist in a free market due to competition. So even though a cartel might form for some time or a company may hold a monopoly on a product, if the prices are not at true market value (too high, inflated, not competitive enough), a competitor will enter the space and undercut the monopoly.

If you're interested in reading more on the topic, search for keywords: rothbard, myth of natural monopoly

Doesn't work if the incumbent companies are selling natural resources and have access to all resources in question.

To illustrate, imagine we were in a free market and I wanted to start an oil company to disrupt the prices of an oil cartel. How am I going to do that if I don't have any oil?

I'll counter that illustration. Let's assume that there is no oil left that doesn't have claim by an oil company and therefore you are unable to compete directly in the oil manufacturing business. But, what you are really saying is that you think that the price for what utilization oil brings is too high, and thus you can compete with oil with another resource. This means that you could invest in whale oil, coal, solar, wind, natural gas, or nuclear, or something else. If the price of oil is too high, then there is large amounts of incentive to invest in something that might not even exist.

By offering those resources to the same spaces that utilize oil, you are competing with oil. If you are able to take customers from oil, oil will be forced to reduce their prices.

As I mentioned in the previous comment, you should check out the keywords I mentioned. And if you are thinking that I'm missing something, please direct some resources my way.

You have to have an option that is better than oil, otherwise it wouldn't work. Imagine if car fuel prices were being kept artificially high, how are you going to compete? If you invest in something new, it has to be better than oil. We're lucky in this case that electric cars have numerous benefits, but suppose for a second that they didn't exist. It's possible to run a car on natural gas, coal, etc... but there are hugh costs to competing... investment in new vehicles and investment in service stations and fuel transport being some of the biggest costs. And who's to stop the oil cartel waiting for you to launch, lowering their prices to undercut you, waiting for the competition to fail, then jacking prices back up again?

I agree with you 100% on Libertarians writings that monopolies are wring.

It is my experiences with defenders of monopolies. In my conversations with dozens of Libertarians they do not agree with me that the government should limit monopolies. I have a strong academic background and find that the philosophy of Libertarians is FAR from the grass root Libertarians' beliefs.

Free! Oil has the most friction applied of almost any commodity! In its untaxed state it is cheaper to buy than Coca Cola

That's a bit of an unfair comparison.

Most of the "taxes" you have include to make it "the most friction applied of almost any commodity" to are royalities.

The government for country X owns the land and leases it to E&P companies under an agreement that they will pay a Y% royalty in addition to taxes. In other words, I own this, but I'll let you produce it for me for a Y% cut.

Royalties are taxes in a strict sense, but they would be paid if it were a private landowner as well (though the government usually has more leverage to negotiate a better deal than an individual landowner).

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