Anyone who has ever taken an economics class will have heard some variation on the following lesson: Monopolies are bad. They stifle competition, increase prices, reduce production, and generally abuse consumers. Images of greedy, mustachioed robber barons surveying their smoke-spewing factories with glee are called to mind, as we learn of how the good and noble government must step in to break up these evil and corrupt institutions.
There are two things wrong with this picture. First, monopolies aren’t always bad. When a company innovates in a way that allows it to provide a service at a lower cost to consumers than all its competitors, this is a boon rather than a problem. Second, when monopolies are destructive, it is always the government that has made them that way.