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Comment by lgcmo | Hacker News Reader

Natural monopolies are always the first suggestions to keep public owned. And you can't have 2 water suppliers piping into your apartment from the source

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You can. It is just that the costs of pipes (wires) are so high that you can't both charge a reasonable price and pay for the pipes. This is why most farms are on private wells - $10k to drill a well is cheaper over 50 years than pipes to each farm. (Many Iowa farms are on public water not a well because wells in those parts tend to not produce enough water for a house's need - and they pay a lot of money per month to pay for those pipes)

This is why we say utilities are a natural monopoly. If you have the pipes/wires in place and even a little paid off you can undercut and competitor until they are bankrupt.

Even if there is only one set of pipes under the street, the owner of those pipes is constrained from acting in a predatory way if the market is free. They are disciplined by potential competition (if prices too high or lets the water quality drop, it suddenly becomes financially viable for a competitor to dig a rival pipe, or set up localized system, or offering water trucking to your site).

Under a government-granted monopoly, that threat is legally banned (except for maybe water trucking)

You are correct, but only at unrealistic levels of bad. A potential competitor risks that they lower the prices after the have dug in the pipes and that is enough that the competitor is bankrupt. Even if water quality is the issue, it is easier and cheaper for the incumbent to fix the issue than for you to dig in new pipes. Only in the case where the incumbent has worn out pipes that all need to be replaced at once (unlikely - pipes last a long time and we have had good success relining pipes in many cases: leaving only a minority that need expensive replacement at any one time).

Because the bad has to be unrealistically bad before someone can compete nobody sane will.

>only at unrealistic levels of bad

Bad water or water service is not unrealistic.

It took FIVE YEARS for Flint Michigan's water to be re-declared "safe to drink without a filter." The solution involved FEMA and the National Guard.

That can't have been the best way.

Even if allowed it would take more than 5 years for a private company to put in enough pipes to compete in Flint.

It would not take 5 years for a competing interest to complete a takeover bid of the water utility and implement faster/better fixes. Nor would it take 5 years for water customers (if they could) to divert the money that funds the municipal water district away from them and towards an alternative like water filtration or truck deliveries

It would take five years to complete all that. We'd certainly hope that they can manage your project better and get it started sooner than that but there is a lot of labor and there's only so many crews can do it and so many so much equipment. Your competing water utility could certainly serve the first customers in two or three years, but there's a lot of work needed and I would be surprised if they could get the whole town done in even five years.

Government granted monopolies are granted under oversight and regulation that would be extreme in any other scenario. Many of them don't even get to set prices. No discipline or market forces needed. The regulators just regulate predatory action.

In your example no one is going to dig a rival pipe because you can't just go around installing pipes under other people's roads and land. The permission to do that is granted to a single entity by the government, further reinforcing the natural monopoly. There is no situation where it is economically feasible to lay more pipe when you have no right to do that.

Yeah nah, nobody getting entirely new pipes dug up under the infrastructure that's already on top of it to save few cents per litre. If you're big water using industry it might make sense but for anything residential it doesn't

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