Peter Thiel: Monopolies Are A Powerful Tool For Innovation

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The cofounder of PayPal, Peter Thiel, recently put forth the idea that monopolies can be favorable for the creation of innovations.

As he describes in a Wall Street Journal article, monopolies don’t operate under the same constraints as perfect competition. Since a monopoly doesn’t “have to worry about competing with anyone, it has wider latitude to care about its workers, its products and its impact on the wider world.” Additionally, it “can afford to think about things other than making money; non-monopolists can't. In perfect competition, a business is so focused on today's margins that it can't possibly plan for a long-term future. Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits.”

Monopolies could serve as powerful tools for creating entirely new category of goods and services, as is the case with companies like Google or Apple. According to Thiel, “Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep innovating because profits enable them to make the long-term plans and finance the ambitious research projects that firms locked in competition can't dream of.”

As medical organizations grow to become larger and larger, one must keep in mind the potential breakthroughs in healthcare they could achieve as a result of their size.

Summary By MedicalGroups.com

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