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Monopoly in Trash Collection

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aspurling posted on Sun, Apr 21 2013 11:30 AM

In the community where I've lived for the past seven years or so, there are a couple of different trash collection companies that compete for business.  The practice has been that residents decide for themselves which company they want to collect their trash, and then the residents contract privately with their chosen company and pay them for the service directly.  If the residents don't like the service, they're free to switch to another company.  I myself made such a switch not long after I moved here.

Recently, however, I've been notified that our town council has decided to grant a monopoly to one of these companies in exchange for a promise of lower rates for everyone.  My immediate thought was that if this company is in a position to offer lower rates, why did it not simply do so before now and thereby capture customers from its competitor(s)?  I sense that something funny is going on with this, but I'd be interested in knowing what the readers of this forum think.

 

Thanks,

Aaron Spurling

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Malachi replied on Sun, Apr 21 2013 11:49 AM

I've been notified that our town council has decided to grant a monopoly to one of these companies in exchange for a promise of lower rates for everyone.  My immediate thought was that if this company is in a position to offer lower rates, why did it not simply do so before now and thereby capture customers from its competitor(s)?

you nailed it.

on another note, has anyone considered that the subsidization of waste disposal is a major contributing factor to increasing the production of waste? it manifests itself in many ways, consider the how many small goods actually cost less than their packages.

Keep the faith, Strannix. -Casey Ryback, Under Siege (Steven Seagal)
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Blargg replied on Sun, Apr 21 2013 2:22 PM

Where I am, if one is to have electricity and water service, one must pay over $20 a month for weekly garbage collection, even if one doesn't generate that much trash. So not only is there monopoly, but you're effectively forced to buy it even if you don't need it (I generate very little trash, and put my cart out every two months or so, so I'm effectively paying $40 for them to empy one cart with a few bags in it).

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you should generate as much trash as possible so you get your money's worth.

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if this company is in a position to offer lower rates, why did it not simply do so before now and thereby capture customers from its competitor(s)?

Economies of scale. They might be able to offer lower rates when they service more people. Perhaps they didn't have the necessary funds to buy the capital to expand enough to be able to handle both a higher capacity and charge a lower price.

Then again, this seems doubtful. I have no idea what the problem is.

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Tony Soprano moved to your town.

"Blood alone moves the wheels of history" - Dwight Schrute
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Albert replied on Mon, Apr 22 2013 9:53 AM

Oh I have an idea what the answer might be.

They are right, the new monopoly company probably used the economy of scale argument to supposedly convince city council. But they could have chosen to merge or buy out the competition.Behind the scenes they probably made the "biggest kickback" argument, as with all government monopolies.

The telling sentence was "we have been notified of a new decision to grant company A a monopoly". No vote, no referendum.

But as with 99% of monopolies, the reason they are set up have nothing to do with whether they serve the customer better, it has to do with whether they serve the politicians better.

If you tell us which town is involved and which councilmen and which garbage companies, I bet we can find a hidden connection.

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Wheylous replied on Mon, Apr 22 2013 10:08 AM

If you tell us which town is involved

CIA alert.

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