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I Thought They Wanted Higher Prices

Can anyone explain why anti-trust regulators are forcing Reynolds American tobacco to spin off Lorillard’s Kool and Salem brands before completing its purchase of Lorillard?  Are they worried that there might not be enough competition in the cigarette industry?  Do they think prices might go up?  Isn’t that what the government wants?

I guess they’re concerned that if there are fewer tobacco competitors, and prices do rise, that more people will quit smoking and that revenue from taxes (that were imposed, supposedly, to encourage quitting) will decline.

Of course if it were up to me I would end all antitrust regulations.  In a free market, the only time a monopoly would occur is when a company is so good at something that no other company can compete.  You see, the objective of antitrust rules is not to foster competition, but to keep prices low.  Competition does push prices down of course, but if a certain company is so efficient at something that no other company can beat its prices, why is that a problem?  Just let them do it and put the resources that would have gone into competing with them to some other use.  If they raise their prices to a point where other companies can do it cheaper, then other companies will do it cheaper.

Really, the only parts of the economy where we see monopolies keeping prices high is where those monopolies are enforced by the gun.  Some examples might be public utilities, neighborhood drug gangs and the Post Office.

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