In basic economics, a monopoly occurs when a single provider dominates a market, reducing competition, limiting choices, and often raising prices. A familiar example is your local utility company, which may be the only option for electricity or water in your area. Because there is no competition, customers cannot “shop around” for better service or prices. Similarly, a monopsony is when a single buyer dominates a labor market: Think of a coal town in which one mining company employs nearly everyone. Workers have few alternative employers, which limits their bargaining power and suppresses wages. In education, government-run school districts often function as both monopolies (for students) and monopsonies (for teachers), distorting the market and shielding the system from accountability.
The Problem with the Education Monopoly
US public education operates as a monopoly. Government-run schools dominate the market, leaving families with limited choices, as more than 90 percent of kids in school attend a public school. Most students are assigned schools based on their addresses, with access to better options restricted. As Friedman warned, monopolies stifle innovation and progress, leading to worse academic outcomes.
Three problems arise from education monopolies:
- Limited Choices: Families often have no alternatives to underperforming schools.
- Inefficiency: Excessive administrative costs divert funds from classrooms.
- Lack of Accountability: Without competition, schools have little incentive to improve.