The Instigator
Con (against)
8 Points
The Contender
Pro (for)
0 Points

Deregulation increases the chance monopolies will form

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Voting Style: Open Point System: 7 Point
Started: 1/28/2013 Category: Economics
Updated: 4 years ago Status: Post Voting Period
Viewed: 3,239 times Debate No: 29610
Debate Rounds (4)
Comments (58)
Votes (2)




Debate background;
In the forums malcolmxy claimed that deregulation of natural resource industries causes monopolies to form. I refuted the claim, stating that regulations hurt competition and deregulation increases the ability of smaller businesses to compete. malcolmxy responded with the claim that deregulation of the financial industry (a different industry) hurts competition. I responded that it does not hurt competition, but it may increase the chance of fraud.

To settle this dispute we started this debate

Debate Rules;
1.) malcolmxy has the BOP
2.) 1st round acceptance only
3.) no ad hominem attacks
4.) there is the assumption of laissez-faire after deregulation

BOP Requirements;
The BOP is met only if malcolmxy can successfully argue all of the following claims;
1.) deregulation hurts competition
2.) deregulation increases the chance that a monopoly will form
3.) regulations increase the ability of smaller companies to competition


Thanks to my opponent.

The 1st point that Pro failed to understand in the forums, because existing theory on monopolies states that a monopoly is only formed when product demand is ELASTIC, was my contention is exactly the opposite of this in natural resource markets.

The typical monopoly would be something like the iPod, or Windows-based PC. Both have competitors, sure, but they so dominate their respective markets that they control nearly every aspect of it. This set-up works, to a certain extent, in these industries, however, because of the speed at which products become obsolete. These companies may not have any real competition right this moment, but the moment they fail to innovate, there is someone waiting to devour their market share.

This is in contrast to a product like Kleenex or Q-tips, who also face competition in the form of tissues and cotton swabs from other manufacturers, but innovation in these products is barely necessary over time, and so these products not only control the market, but they have become synonymous with the overall product, itself.

Those are the kinds of markets economists traditionally expect to see form into a monopoly, and as long as the firms who manufacture these products don’t exhibit notorious and obvious predatory monopolistic practices, as Microsoft was accused of with their bundling of Internet Explorer and Windows, most economists don’t have a problem with these kind of monopolies.

What I’m talking about are totally different animals. I’m talking about natural resources with inelastic demand curves such that:

1. Large increases in price have little effect on quantity.
2. They are finite and non-renewable, or can be made to be this way,
3. Not only will they lead to monopolies, but they will lead to predatory monopolies and profits will never normalize as is predicted with elastic monopolies, because the resource continues to grow in scarcity and is gone before the normalization process has a chance to occur; or

With these goods, when there is a lack of regulation in the market, monopolies/oligopolies form, and they do so in the most vicious, predatory fashion.

For Instance...

Example #1


A sovereign entity can make regulations within its own borders, but no one has the power to regulate the entire world at this point. Oil producers exist the world over, so the world market for oil is completely unregulated.

How is this industry organized?

A cartel of the 6 most prolific oil producing countries, which currently stands as a group of 12 oil producing nations, formed and began controlling the price of oil by manipulating world production levels.

Now, Con has argued elsewhere that consumers, and their demand, are what sets a price. This is simply false (at least half so).

Today, near my home, gas is at ~$3.27/gallon. Now, I understand that refining capacity has more to do with the price of gasoline than oil prices do, but oil prices are certainly a component, so let’s say that supply was stifled by OPEC such that gasoline in my neighborhood shot to $5/gallon.

What would be the effect on quantity consumed?

Well, the real price of gas has risen from ~$1.75/gallon in 1995 to ~$3.50 today (guess I’m lucky) [1]

This is nearly the perfect $1.73 needed near my home to help us determine what would happen to gas consumption should gas rise to $5/gallon near my home.

In this same period, U.S. consumption of gas has risen from around 7.5 million barrels per day to 9.0 million barrels per day[2]

Perhaps you find yourself thinking, “so what? That was over a period of 20 years..”

First of all, the bulk of the price increases happened between 2003 and 2008[1].

And real median income? It’s gone from $22,000 to $26,000 per year during that same time[3].

To sum up:

a. The world market for oil is largely, if not completely, unregulated.
b. The oil market is dominated by a price-fixing oligopoly (close enough...OPEC would be a single nation monopoly if it could be)
c. Even in a country like The U.S., which gets little of its oil from OPEC nations, we feel the effects of this oligopoly’s price manipulation in just the same way that countries who receive almost all of their oil from OPEC nations, because as a market oligopoly, OPEC can set nearly whatever price it chooses (we produce the majority of our own oil, with Canada, Mexico, Venezuela, and, occasionally, Saudi Arabia picking up the slack).


no regulation = monopoly

Example #2

For a sushi lover, as well as a chef, there is no fish more important than Bluefin Tuna, or as it is known to the Japanese, Toro.

On days when there aren’t a great many bluefin that make it to market, some bluefin tuna can be auctioned off for nearly $200,000[4].

Bluefin is actually a generic name for 4 species of fish [5] which are found in waters the world over, though mostly in the waters of the Pacific Ocean and other bodies of water located chiefly in the Western Hemisphere.

Unfortunately for the bluefin, they don’t stick to the waters of any one country, or any country at all, as most are found in the deep ocean considered “international waters”, and in this unregulated free-for-all fishing industry, Mitsubishi is purposefully fishing the bluefin to extinction[6].

Why would they do this? Well, they have several warehouses which freeze these fish to -60C, and a bluefin frozen at this temperature can be sold decades from now to a Japanese public hungry for this delicacy, when no more exist in the ocean (which is predicted to happen in 2048)[6] and Mitsubishi controls the last of the fish to exist, even in their cryonic death slumber.

When this happens, Japanese consumers, who value this fish over all others for sushi, will harken back to the good ol’ days when you could get a belly of toro for $200K, because with their death grip on the market, Mitsubishi will set the price it believes is the absolute maximum it can get based on how much supply is released, and how much supply needs to be released such that they can sell the bulk of what is frozen before it goes bad, and Japanese consumers will eat it up. Literally.

To sum up:

1. World Bluefin Fishing Market is entirely unregulated.
2. The monopoly does not quite exist yet (though, it is close. Mitsubishi controls nearly 50% of bluefin tuna caught each season...and off-season), but it is being prepared to exist.
3. By the time the profits for this monopoly even had a chance to think about normalizing, the bluefin will be a distant memory, and the last piece of bluefin sushi, while also the lowest in quality for having been frozen the longest, will also be the most expensive.

Personally, I hope I live long enough to see some rich, insane Japanese guy pop a piece of $5 million dollar Nigiri down his pie hole, except it’ll probably be the CEO of Mitsubishi, and it will likely be gratis.


Is there any question that in an unregulated, inelastic market where the good is a natural resource, that anything but a monopoly or oligopoly will form?

If anyone found my argument to be particularly weak because of how stylized my writing is, I implore that you review my sources which back up my theory quite nicely. Most are charts.

Next round, I will examine what happens to natural monopolies which distribute a natural rousource when they go from regulated to unregulated (hint - they don't foster education).



Debate Round No. 1


  1. Violation of Debate Rules

Pro violated the 2nd rule of the debate; “1st round acceptance only”.

  1. Elastic Demand

Elasticity (PED) = % change in quantity demanded / % change in price

If the % change in demand is the % change in price then the demand is affected by the change in price. If the % change in demand is < the price than the demand is unaffected by the change in price.

More elasticity means higher prices are more likely to reduce the demand, and lower prices are more likely to increase the demand. I believe by “elastic markets” Pro is actually referring to Inelastic markets, where the change in price is > the demand.

There is no such thing as a perfectly inelastic market, because there is no equation where change in quantity / by change in price = 0, because you can’t divide by 0.

Total Revenue (TR) is Maximized at the Price Equilibrium, where change in demand = change in price.

  1. Brands vs Monopolies

Pro claimed that iPod and Windows are monopolies, when in actuality they are brand names. These brands are in competition with other brand names, as well as generic brands. Pro claims that their success is due to their size, when in actuality it is due to the quality of their product. This is why Mac constantly attacks the quality of Windows in their commercials. The iPod by no means has a monopoly; there are a large number of MP3 players competing with the iPod. (ex. Rio, Cisco, Belkin, and Generic). As Pro so appropriately pointed out, as soon as innovation slows down, smaller companies will seize the customers of the larger brands; this is why successful companies spend most of their budget on research and development.

MP3s are luxuries, which makes them highly elastic markets, not an inelastic market, so prices affect the demand.

Pro gives other examples of Brands, which he tries to pass off as monopolies; such as Band-Aides, or Q-Tips. These are not monopolies, they are Brand Names; the fact that all cotton swabs are mistaken as “Q-Tips” is an example of good branding, not an example of a monopoly. The goal of branding is to conflate your brand-name with the product to save on advertising costs. It does not eliminate competitors, but it does give you an advantage. Regulations cannot eliminate brand names.

  1. Conditions for a monopoly to form

Pro has argued that there are 3 conditions for a monopoly to form; this time he correctly uses the term inelastic rather than elastic.

First pro claims that to be inelastic the market price must have little effect on the demand for quantity. Pricing above the equilibrium causes a deadweight loss of demand, creating a TR loss, as a result of the PED. In other words, the market is already priced below the equilibrium.

His second condition is that they are finite, and nonrenewable; such as oil. The lower supply means the equilibrium of price and quantity are also lower. His third condition is that once monopolies form, they would price low in order to eliminate competition.

The brunt of this argument is that companies will operate at a loss in order to bankrupt competitors. The flaw in this argument is that in order to keep competition out they must maintain their low prices to prevent the entry of new competitors. Unless the monopoly gains the support of the government they would be unable to maintain the low prices, and would be forced to raise prices. By raising prices they allow for the reentry of competition.

  1. Oil Industry Regulations

Pro claims that the oil industry is “completely unregulated” because oil companies can move their business overseas; this claim is completely false. Oil companies are subject to the drilling regulations of the country where the oil reserves reside. BP is subject to US oil restrictions when drilling off the coast of Texas and restrictions on the keystone pipeline has also restricted international oil companies from tapping the reservoir.

If anything regulations have restricted the supply. Restrictions on drilling would result in a deadweight loss, because the available supply would not meet the demand; this hurts the TR of the oil industry, and prevents new companies from entering the market.

  1. Price

As I was trying to get across to Pro in the forums, just because you have something does not mean it’s valuable. The Demand determines the price relative to the supply. A Demand surplus increases the value of a product; a demand deficit decreases its value. The demand limits the maximum price per unit due to the PED. The supply limits the maximum quantity of units capable of being produced. Say the supply of oil is fixed at 2 units; an increase in demand from 2 to 3 units would drive up the value, while a decrease in demand from 2 to 1 unit would decrease the value, due to a deadweight loss.

Pro claims that because price is relevant to the supply, the price can be determined by a monopoly, by restricting the supply. This is just plain wrong; if the supply was restricted there would be a deadweight loss, resulting in a loss of TR. The only way to maximize revenue would be to price at the equilibrium, which a monopoly cannot do without government intervention. Only a Monopsony can control prices, by limiting the demand thereby forcing the suppliers to lower or raise prices to the equilibrium.

  1. OPEC

OPEC is not a monopoly. If OPEC overprices their oil it does not affect the price our oil exports. When OPEC increases the price of their oil, while other countries continue to export oil, they end up losing their trade partners to the lower priced competitors. The countries with a larger supply of oil can only dictate higher prices after their competitors maxed out their exports; this is not a good strategy.’ If regulations were implemented to create a price floor, to prevent low trading, it would result in a deadweight loss of demand, resulting in the supplier losing TR. If regulations were implemented to create a price ceiling, to prevent high trading, it would do more to prevent competition than promote it.

  1. Tuna

The Tuna example further supports the demand argument. Pro said himself “there is no fish more important than Bluefin Tuna”, therefore when very few are caught, the demand cannot be met resulting in an increased price. If it was a different fish the same catch would not be as valuable, because the fish would not be as valuable to the consumers. As pro said, “Japanese consumers value this fish over all others for sushi”. If the Tuna went extinct, the Japanese would not pay through the nose for Sushi; instead they would each less sushi and switch to less expensive meals. Mitsubishi would only hurt itself if the Tuna went extinct, as it would be more profitable to sell their surplus of tuna when the catch is low; which is a more likely explanation for what they are doing.

  1. International Waters

In regards to international waters, the nationality of the fishing-boat determines the country with jurisdiction over the fishermen. For example anyone aboard a US ship is subject to US laws. Furthermore, international laws and treaties govern international waters.

  1. Regulation Hurts competition and promotes monopolies.

Monopolies cannot survive in the free market, for the very reasons pro pointed out. Monopolies form through predatory pricing, and superior products. If they cannot maintain innovation and low prices, they lose their monopoly. In order to maintain the monopoly government intervention is required; legal rights to innovations, outlawing competition, or regulations affecting price and/or production.

International Economics: Theory and Policy, v. 1.0 by S. Suranovic

Macroeconomics: Theory through Applications, v. 1.0 by R. Cooper & A. John

Microeconomics: Theory through Applications, v. 1.0 by R. Cooper & A. John



malcolmxy forfeited this round.
Debate Round No. 2


I know you wanted to start the debate over, so yo could go first, but you could have atleast finished this debate. We could have at least used this debate as a warm up.



malcolmxy forfeited this round.
Debate Round No. 3


malcolmxy forfeited this round.
Debate Round No. 4
58 comments have been posted on this debate. Showing 1 through 10 records.
Posted by DanT 4 years ago
malcolmxy, by "blow it out your @ss", do you mean "Dan, you are right, but I refuse to concede that I'm an illiterate F*** who likes to misquote you and others to make a point"
Posted by DanT 4 years ago
The illiterate malcolmxy asked in the forums, "Now, correct me if I'm wrong, but is this not both an obvious and a given? I already had to add that a 'lack of' means 'none' to satisfy him, plus edit the rules/conditions of the debate 2 other times for petty crap that didn't matter or was a given by definition of the words already used. I was sick of these petty changes, so I said, take it or leave it.

He left it.

He states that it was because my definition was a 'fallacy' (his word). Is it? Maybe I'm being stubborn, but I don't think so."

First off, that is not what I asked him to do. I asked malcolmxy to get rid of the definition, which is a narrow definition fallacy, and use the rule from the original debate(this one); the rule being "there is the assumption of laissez-faire after deregulation", which not a definition. I never asked him to add it to the end of his definition, I asked him to remove the definition, and replace it with the original rule.

Here is how people responded;
"Someone being arsey. I still think this site is massively anal when it comes to definitions" ~ Stephen_Hawkins

"I don't remember who said it first, but DanT likes to excessively define words to semantically disprove arguments" ~ imabench referencing a slanderous joke, that refers to me correcting people when they misuse words. This statement has no relevance to the dispute between me and malcolmxy, because I want to get rid f the definition, not expand upon it.

Those are the only 2 people who responded. Both of which were criticizing malcolmxy's persistence on over-defining economic terms, but due to malcolmxy's illiteracy, they thought I was the one pushing for stricter definitions.

If Person A believes X, and Person B believes Y, and Person C says Person A is wrong because Y is wrong; Person C is not agreeing with Person B, he is agreeing with Person A.
Posted by malcolmxy 4 years ago
blow it out your @ss
Posted by DanT 4 years ago
Say Person A says x = Y, and Person B said X = Z.
Now say Person C says that Person A is wrong because X does not equal Z.
Person C was really criticizing what Person B said, but was misattributing it to Person A.
Simply because person C misattributed it to Person A, does not mean he was criticizing what person A said.

damn correct.
Posted by DanT 4 years ago
No wrichcirw.

Say Person A says x = Y, and Person B said X = Z.
Now say Person C says that Person A is wrong because X does not equal Y.
Person C was really criticizing what Person B said, but was misattributing it to Person A.
Simply because person C misattributed it to Person A, does not mean he was criticizing what person A said.
Posted by malcolmxy 4 years ago
I tried t set forth a standard set of definitions from "the economist" magazine, but DanT doesn't agree with "the economist" magazine, so they're wrong and he's right...with his 20 years of experience on the planet and their hundreds of years of economic knowledge and experience.

everyone shouldn't be entitled to their opinion.
Posted by malcolmxy 4 years ago
don't even bother, dude. it's hopeless and worse yet, it's boring.
Posted by wrichcirw 4 years ago
DanT: "malcolmxy they thought I was the one trying to over-define everything, whereas you were the one trying to over define everything. So their criticisms of me, was in actuality criticisms of you."

LOL, this has the logic of "they say I'm wrong, but really you're wrong, so they're saying you're wrong".

And 2+2=5. Why? Because I say so.
Posted by DanT 4 years ago
malcolmxy they thought I was the one trying to over-define everything, whereas you were the one trying to over define everything. So their criticisms of me, was in actuality criticisms of you.
Posted by DanT 4 years ago
"You have enemies? Good. That means you've stood up for something, sometime in your life."~Winston Churchill

"Economists estimate this share to be between 25-30%", gotta love how you make bold assertions with no source to back it up. 30% is not nearly enough to dominate any given market. If 30% was the standard, does that mean in an oligopoly made up of 3 firms, each only as a 10% share in the market?

Market share does not define a monopoly. Market share is just an arbitrary figure the DOJ picked to persecutes large firms under anti-trust laws.
The director of economic research at Hudson Institute, Alan Reynolds, said that "Dominant firms are the norm in high tech. TV ads boast that virtually all internet traffic travels on Cisco systems. Quicken has 80 percent of the financial-software market. Netscape once boasted of having 90 percent of the browser business. Intel still has 76 percent of the microprocessor business. America Online, Lotus Notes and Oracle all dominate their respective markets. Executives who work in such glass offices should think twice before encouraging zealous prosecutors and gullible reporters to define monopoly as a large share of an artificially tiny market."

The strict academic definition of a monopoly is a market structure in which there is only one supplier of a product. A less strict definition is a market structure where one supplier controls the entire market, but is not necessarily the sole supplier. For example; a technological monopoly, like standard oil, where their competitors must pay them due to copyrights in technology. In effect, they could control the market through their copyrights. Another example would be the east India trading company, where competition was illegal due to their government monopoly. There was still other firms trading in tea, but they were simply middle men between the East India Trading Company and the consumers.
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Vote Placed by Magicr 4 years ago
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Vote Placed by imabench 4 years ago
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