Argument: The free market naturally leads to concentration of power in the hands of corporations

Many global markets are dominated by a few big firms: look, for example, to the markets in fast food, dominated by McDonald’s, or the market for drilling and selling oil, dominated by Exxon, Shell and BP. This concentration of market power is natural outcome of free markets, this is because of economies of scale – a production line can produce each individual unit faster and more cheaply than if products were made individually. Also partly because the transaction costs of markets are too high (i.e. the costs of negotiating, monitoring and managing all the exchange relations necessary for production and distribution of the good or service involved), corporations have an incentive to structurally organize themselves into large firms (The Nature of the Firm, 1937). This also creates barriers to entry; while an individual may be able to manufacture an individual unit it is much more difficult to set up a whole factory from scratch in order to compete, there is then little possibility of competitors entering the market as a result of price rises.

Being so large gives them an unfair advantage towards both their suppliers and their consumers. Large firms can collude to form oligopolies. This generates more profit for the firms involved, but raises prices above the market clearing price for consumers as the firms agree not to undercut each other, this may also be informal simply raising prices by reducing the amount of choice or supply.

Vis-à-vis their suppliers, these firms gain an equally unfair bargaining advantage. A prime example is the market for (low skilled) labour: with a surplus of (low skilled) labour, each individual worker either has to accept a very low wage or be replaced by someone who does want to work for that low wage. This unequal bargaining power keeps the price for labour very low, so low that workers have no surplus budget to invest in themselves to be able gain skills, negotiate better jobs and thereby lift themselves out of poverty.

Candidate 1: "The notion that labour alienates might have looked true in Marx’s days, but nowadays, employers have learnt that if they want to get the most from their workforce, they need to make their jobs meaningful. Employers can do this by offering work that fits an employee’s ‘intrinsic motivation’ (Intrinsic motivation at work, 2009), and by designing the work process in such a way that it facilitates ‘flow’ (Beyond boredom and anxiety, 2000). Interestingly, these days, companies actually compete for labour by making their work environment more meaningful, as for example Google’s ‘Life at Google’-page shows (Life at Google).

As to the idea of allowing a market in organs: if people willingly and knowingly choose to sell their organs, what is wrong with it?

Also, consider the status quo: demand is still there, but the prohibition effectively lowers supply, leading to a significant number of deaths every year for lack of donor organs. Why is that morally more justifiable?"
Candidate 2: "It’s not true that all markets naturally lead to a concentration of power. Whenever concentration of market power, even leading up to a monopoly, does happen, this is caused by the underlying cost structure of the industry, whereby a company experiences increasing returns to scale and relatively high fixed costs. This means it is most efficient for the first entrant in a market to become as big as possible, as fast as possible. An example of such a natural monopoly used to be the markets for utilities: when the distributing networks for water or energy weren’t built yet, the first company to expand would gain a natural monopoly.

Given that a natural monopoly is a consequence of the underlying cost structure of the industry, there is not much one can do to change it. Basically, one can choose between a private unregulated monopoly, private monopoly regulated by the state, and government monopoly (Capitalism and Freedom, 2002). Of these, the private monopoly is best. A government monopoly would not just be a monopoly, but would also have the force of law to back it – the result would be the most direct form of regulatory capture, where the business interest takes over the public interest of the government agency."
Candidate 3: "A free market can only operate when some basic conditions have been met. One of these is the condition that exchange of private property is possible. It’s important to realize that private property is both a normative concept but also a legal reality: in everyday life, private property exists because there are contracts and title deeds that prove that something is my private property.

This legal dimension of private property is key to realizing how the government can make free markets work even for common and public goods. The key is to create private property rights that are rivalrous and excludable, and enforce them accordingly. It is these private property rights that are traded, not necessarily the good itself (The Private Production of Public Goods, 1970).

For the public good of roads, the private property right the government can create is the right to operate a toll booth on that road. For the common good of fisheries, the government can create conditional exploitation rights to private actors, and for carbon dioxide emitting industries, the government can create limited, tradable emissions rights. The most well-known example of government created private property rights is intellectual property: even though listening to music is non-rivalrous and with the internet, relatively non-excludable, the government’s enforcement of intellectual property allows a business like iTunes to survive and thrive."

It’s not true that all markets naturally lead to a concentration of power. Whenever concentration of market power, even leading up to a monopoly, does happen, this is caused by the underlying cost structure of the industry, whereby a company experiences increasing returns to scale and relatively high fixed costs. This means it is most efficient for the first entrant in a market to become as big as possible, as fast as possible. An example of such a natural monopoly used to be the markets for utilities: when the distributing networks for water or energy weren’t built yet, the first company to expand would gain a natural monopoly.

Given that a natural monopoly is a consequence of the underlying cost structure of the industry, there is not much one can do to change it. Basically, one can choose between a private unregulated monopoly, private monopoly regulated by the state, and government monopoly (Capitalism and Freedom, 2002). Of these, the private monopoly is best. A government monopoly would not just be a monopoly, but would also have the force of law to back it – the result would be the most direct form of regulatory capture, where the business interest takes over the public interest of the government agency.
