The [Myth of the] Standard Oil Monopoly

In an excellent video, Lawrence Reed debunks the case of Standard Oil as monopoly.

The monopoly concept is seriously misunderstood. Rather than sticking to the classical definition; “an exclusive grant to sell given by government”, some believe that it’s something to do with market share.

In the video, Reed cites the recent example of the US FTC, which decided to take on five evil cereal manufacturers on charges of “shared monopoly”. What the hell is a “shared monopoly”? Who knows, but anyway, it’s apparently not cool if five competitors have 80% of the market share of ready-to-eat cereal. But isn’t cereal in competition with fruit, toast, pancakes and bacon?

Also, it was apparently not cool that Standard Oil once fleetingly held 90% of market share, despite having 66 other competitors ready to pounce when Standard slipped up.

The lesson: monopoly has nothing to do with market share as the definition of “market” can be whatever the hell you want it to be.