this post was submitted on 10 Apr 2024
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Distribution is a natural monopoly. Supply is not. Every supplier is putting the same, standardized product in the pipes. If they put a cubic foot in, and I take a cubic foot out, I can call them my supplier, even if they are putting it into the pipeline a thousand miles away from me and there is zero chance I will ever be burning the actual gas they supplied.
Indeed, and separating distribution from production is how decent competition is introduced in such markets (there are still barriers to entry related to infrastructure, but they're nowhere as bad as the ones when the distribution infrastructure is owned by the gas company).
However, often that's not how things are in the markets for gas, power and water supply as well as internet access.
Not only that but in markets were those things are separate the supply companies will try as hard as they can to get their hands on the distribution side (for obvious reasons), and, well, neoliberal politicians are usually happy to let them. The natural tendency in an unregulated market in those things is for sooner or later to end up in a winner-takes-all situation were one of the suppliers got it's hands on the distribution side and used it to create a monopoly position, if only locally.
It's a funny thing about the so-called "Free Market" in domains were it is possible for businesses to directly or indirectly create the conditions for natural monopolies: without actual intervention from an outside strong and independent actor (i.e. a governmental power with the will to intervene) such markets sooner or later end up naturally not being free anymore.
Market actors activelly and constantly seek a dominant position so if there are conditions for a monopoly (the most dominant position there is) one will eventually succeed and if there aren't but there are for the next best thing (a cartel) a handful of them will eventually succeed.