“…the tolls imposed by the bridge company amount to a tax Moroun and his company have and continue to impose on local businesses of all kinds, not just giant corporations.”
One of the reasons monopolies are unhealthy for the economy is because of their ability to raise prices without any justification or what economists might describe as “market signals.”
Witness the recent decision by the Ambassador Bridge Company to raise tolls by roughly 19 percent from $4 to $4.75. The bridge, one of the busiest in North America, carries thousands of trucks and cars every day. But its daily users remain at the mercy of the bridges owner, Matty Moroun, who not only owns the bridge, but trucking and logistics operations.
But Moroun’s trucking operations face the daily competition from rival freight companies and American and Canadian railroads, which means their prices are constrained by competition. On the other hand, Moroun’s bridge, like other monopolies, is immune from the fundamental laws of market economics because the competition is thin, leaving the owners free to raise prices whenever they see fit.
Any competition the Ambassador Bridge faces, from the Detroit-Windor Tunnel with its limited capacity, the truncated cross river ferry service and Blue Water Bridge between Port Huron and Sarnia — which is miles out of the way for many shippers and travelers — is very, very thin.
A spokesman for the Ambassador Bridge Company insisted the toll increase was the result of pressure from the Canadian authorities. But it also coincided with an uptick in traffic across the bride as General Motors, Ford and Chrysler, as well as Toyota and Honda, increased vehicle production in Michigan and Ohio.
Vehicle production at Chrysler, which helps send a lot of trucks across the bridge, increased by 21 percent in June, company records show. Taxes are a sensitive subject these days, as they certainly should be. But the tolls imposed by the bridge company amount to a tax Moroun and his company have and continue to impose on local businesses of all kinds, not just giant corporations.
The fact is monopolies of any kind can only exist with political protection, and Moroun and his company has been very judicious in distributing his campaign cash for maximum impact.
But this toll increase also shows why the Moroun monopoly has to end soon.