Orthopedic Business Review written by Will Kurtz, M.D.
Scarcity and Supply Sided Monopolies
In 1890, people lived in a world of scarcity. If you wanted to see at night, there was a 90% chance that your kerosene in your lamp came from Standard Oil. John D. Rockefeller became the richest man ever by controlling the oil refineries and railroads that supplied kerosene, squeezing value from the demand side (i.e. higher oil prices for customers), and creating a supply sided monopoly. The Sherman Antitrust Act ruled that Standard Oil restrained trade and harmed customers, so the government broke up Standard Oil in 1911.
Few supply sided monopolies exist today because information and resources are readily available. OPEC had a supply sided monopoly, but new oil extraction techniques and electric vehicles have weakened their monopoly. In orthopedics, CeramTec has a rare, supply-sided monopoly on ceramic head balls. Their high fixed cost, brand and cornered resources are a significant barrier to new entries into this market.
Abundance and Demand Sided Monopolies
Today, we live mostly in a world of abundance with efficient markets. When a business over prices their products, another business ...
