Driverless Cars and Monopoly Relationship

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Table of Contents

Historical Perspective
Why Monopoly?
Effects of Monopoly on Consumers
Conclusion
Works Cited

It is only a question of time before Americans can use driverless cars, making the automobiles of today a thing of the past. The advent of autonomous technology will be of great benefit to society by decreasing the number of car accidents and reducing the stress of driving, thus giving people more time for rest.

The race to develop self-driving cars and bring them to market is already underway, with leading carmakers doing their best to obtain governmental approval for the first series of self-driving vehicles. However, the competition is expected to be short-lived because of the major companies that are in the game. Due to economies of scale, the market for autonomous vehicles (AVs) is going to be ruled by only a few firms, though the consequences of such a monopoly can be daunting.

Historical Perspective

With the advancement of free-market principles, the governmental role in the market has become significantly smaller. Economies of scale in the field of transportation have usually tended to promote the development of monopolies with little governmental regulation (“The Market for Driverless Cars”). However, the established cab companies no longer enjoy a monopoly because of Uber, Waymo, and other personal transportation firms (“The Market for Driverless Cars”). It can be assumed that the market for driverless cars will see a shrinking number of competitors and an even smaller role for government in the sector.

Why Monopoly?

It must be stated that the monopolization of the driverless car market is an all but inevitable consequence of the current level of fierce competition. The relationship between monopoly and AVs can be explained by the fact that only companies that will be able to beat their competitors in terms of reliability and safety will stay in the market. The safer the AVs of a particular carmaker, the more likely that its cars will be bought.

AVs are powered by computers that gather data, and the more data they have, the better is the ability of the system to predict events on the road and react appropriately. Another explanation for the expected monopolization is carmakers’ obligations to meet technical standards for AVs, which may be beyond the abilities of some companies. However, the government has yet to decide how to deal with ethical issues, in particular, the exclusiveness of firms’ rights to their technology and the extent to which preventable deaths due to low-quality AV software will be tolerated.

The third reason for a small number of firms producing driverless cars is based on the high costs of such vehicles and the expected proliferation of AV-based ride-sharing services. These services would be preferred due to lower costs of maintenance and possible overcharging stemming from consumers’ limited understanding of new technologies. With the growth of the user base, the number of AVs available for sharing will increase, and people will find it convenient to use a car placed nearby. On the issue of traffic jams and the possibility of congestion pricing, AV firms should consider cooperating with the government.

Beyond the reasons discussed above for the strong relationship between driverless cars and monopoly, there is one more compelling explanation, although it may seem too obvious. The potential profit from monopolizing the AV market or even just its software component is vast. To better understand this point, consider how monopolization is associated with profit maximization through raising prices and restricting output.

In other words, carmakers have great a strong business motivation to become the only players in the market. In the document about AVs, many major carmakers share their vision and long-term goals for self-driving cars, which give a prominent role to the maximization of public safety and provision of more affordable access to AVs (“Shared Mobility Principles”). However, one may note that these companies are trying to create their monopoly on self-driving cars by using the state to enforce regulatory policies.

Effects of Monopoly on Consumers

Provided that the competition is fair and aimed at retaining only the most reliable and technically safe AVs, the effect of monopoly on car occupants is expected to be positive. High interconnectivity between the cars of one dominant brand will be a big win for customers. However, it has to be taken into account that companies can also limit Interbrand communication to make the market a closed ecosystem. Apart from that, the monopoly will inevitably lead to inflated costs for AVs, which will make the technology available only to high-income people.

Conclusion

A monopoly on the AV market is a logical consequence of the current fierce competition between companies. The competition, however, is mostly motivated by the survival instinct and a desire to get rich. Guided by profit maximization, major ridesharing services are eager to take control of the shape of the future of AVs from consumers. The benefits of monopoly are speculative, while the drawbacks are mostly associated with the low affordability of these advanced technologies. This suggests that the government has to consider intervening in the AV field to prevent the market from becoming corrupted.

Works Cited

“The Market for Driverless Cars Will Head Towards Monopoly.” The Economist. 2018. Web.

“Shared Mobility Principles for Livable Cities.” Shared Mobility Principles for Livable Cities, 2017. Web.

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Driverless Cars and Monopoly Relationship

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