CS Question #1: How is the public school system an example of a monopoly?

In the 1990s, the U.S. government began investigating the Microsoft Corporation. Microsoft was suspected of violating antitrust laws. These laws were enacted in the early 1900s. They were designed to prevent monopolies from controlling major industries such as railroads and steel production. The government felt that Microsoft was becoming a monopoly in that the corporation was forcing computer manufacturers to install its software in all the computers it produced. The government also thought that Microsoft was eliminating competitors through unfair practices and hostile corporate takeovers. Recently, a federal court judge ruled against Microsoft. The judge claimed that Microsoft had used unfair advantage to create a monopoly. This monopoly operated against the best interests of American consumers. Microsoft was ordered to split into different companies. This breakup would help create a healthy competition within the software industry.

CS Question #2: How did Microsoft limit competition?

The public school system is one of the largest monopolies in the United States. It is operated and financed by local and state governments. Education is very important to society. The government feels that it is necessary to make sure education is available to all people at a very low cost. Through taxes, the government collects money to finance the public schools. Economically, public schools have an unfair advantage over private schools. Consumers have little choice as to which public school their children attend. If parents want their children to attend a nonpublic school, they must pay it. The cost of private schools limits access to families that can afford to pay the tuition. The public school monopoly creates a lack of choice in the education market. However, society considers this situation necessary since it guarantees that every child has access to education.

CS Question #3: How is the monopoly of the public school system different from Microsoft's monopoly?

In a competitive market, producers meet all demands of consumers. The danger is that some producers cannot successfully compete with other producers. Additionally, some consumers cannot compete against other consumers who can afford to pay higher prices. In a competitive market, those who cannot compete are naturally eliminated. Poverty eliminates some individuals from the market. Society does not want this to happen. The United States government created social programs such as welfare, social security and public education. These programs help all individuals succeed. These social programs are monopolies run by the government. They prevent the negative natural outcomes of a pure market economy.
Antitrust laws were passed to protect consumers. These laws prevent companies from controlling prices and limiting the flow of a product into the market. In the Microsoft case, the government felt that without fair competition new technology would not be developed and computer software prices would not reflect true market value. The suit against Microsoft was intended to allow competition and progress in the software industry. In some ways, public schools are monopolies. However, in many ways they are not. Public schools produce a product called "education." This product is provided to the consumer free of charge and is available to all consumers who demand it.

CS Question #4: Besides education, can you think of any other products of which the government is the primary supplier?

Further Thought:

1. In what situation does a monopoly have a positive effect on society?
2. How do public schools have an unfair competitive advantage over private schools? How are private schools able to survive financially?
3. Do you believe that the government should control access to education? Why or why not?