5.5 No monopolies

Violating the NDP is one of the most reliable ways for a state to manufacture monopolies, even in industries that would otherwise be competitive. Once you see the pattern, it becomes obvious: discrimination by the state creates artificial winners and losers, and the winners inevitably consolidate into monopolies or oligopolies.

How NDP violations create monopolies:

• Licensing that depends on personal characteristics If the state decides who may operate in an industry based on credentials, guild membership, location, “approved” status, or political connections then it is discriminating. And discrimination always reduces the number of competitors. The effect is fewer entrants, higher prices, and monopoly or cartel behaviour. Incumbents lobby to tighten the discriminatory rules further. Innovation stalls because new players can’t enter. This is exactly how taxi cartels, medical guilds, and legal guilds formed.
• Targeted subsidies or tax breaks When the state gives financial advantages to certain firms, certain industries, certain regions or certain technologies it is discriminating based on characteristics of the entity, which the NDP forbids. The effect is favoured firms scale faster than competitors. Capital flows toward politically chosen winners. Unfavoured firms die, leaving a small number of subsidised giants. This is how you get “national champions” and protected monopolies.
• Regulations written to fit incumbents A classic move: write rules that only existing large firms can comply with. Examples are minimum fleet sizes, minimum capital requirements, mandatory reporting systems only big firms can afford, and compliance burdens that crush small entrants. The effect is that incumbents face little competition. New firms can’t enter. Market ossifies into a monopoly or oligopoly. This is discrimination disguised as “safety” or “standards.”
• Exclusive contracts or government‑granted franchises When the state grants exclusive operating rights, exclusive supply contracts or exclusive distribution rights it is explicitly discriminating between firms. The effect is a monopoly is created by law. Competitors are legally excluded. Consumers have no alternatives. This is how many utilities, railways, and postal monopolies were created.
• Barriers to trade (tariffs, quotas, local‑only rules) If the state discriminates based on where a product is made, who made it or which jurisdiction it comes from, it protects domestic incumbents from competition. The effect is domestic firms become lazy monopolies. Prices rise and innovation slows. Consumers pay for the privilege of having fewer choices.
• Discriminatory access to infrastructure If the state gives some firms priority access to ports, spectrum, water, land, or mineral rights, or government procurement, it is discriminating based on firm identity. The effect is favoured firms scale rapidly, competitors cannot access essential inputs, and a monopoly emerges around the privileged firm. This is the story of many mining, telecom, and energy monopolies.

A large market share is not, by itself, a monopoly. A firm may supply most of a market and still be disciplined by competition if customers can leave, substitutes can emerge, and new competitors can enter. A real monopoly exists only where a supplier can raise prices, reduce quality, restrict output, or stop improving without facing effective competitive pressure.

That kind of monopoly is almost never a purely natural phenomenon. It usually requires the state to block entry, restrict substitutes, grant exclusive rights, impose licensing barriers, protect incumbents, or otherwise prevent customers and competitors from disciplining the firm.

The NDP prevents this by forcing the state to treat all firms identically. No special deals. No favoured industries. No protected incumbents. No regulatory moats. Under strict NDP, monopolies can only arise if they are voluntary, non‑coercive and constantly contestable. This means they are not really monopolies at all, just temporary market leaders.