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Principles of Economics- Mankiw (5th) 331

Principles of Economics- Mankiw (5th) 331 - CHAPTER 15 M O...

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CHAPTER 15 MONOPOLY 341 probably be arrested for price-fixing if they ever held an official meeting in America. Most cable TV companies have government-issued licenses that keep competitors out. Thus, this business supports the hypothesis (offered, I think, by George Stigler) that private monopo- lies are not sustainable for long unless they have the weight of government be- hind them. The rapid escalation of prices and the limitations on services seem, how- ever, to be getting customers and their congressional representatives progres- sively more annoyed. Thus, it would not be surprising if legislative action leads soon to a deterioration of the cable com- panies’ monopoly power. . . . This fear about the future diminishes the claim of this otherwise worthy contestant for the first annual prize. Officials of Ivy League universities have been able to meet in semi-public fo- rums to set rules that determine prices of admission (tuition less financial aid) as a function of applicant characteristics, especially financial resources. In some cases, the schools pooled information to agree in advance on the right price to
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