The rise and fall of the sand monopoly in colonial Hong Kong

Abstract

A state monopoly over a scarce natural resource under open access can arguably reduce the costs of supply by constraining rent dissipation. A monopoly over the collection and trading of sand was formed in Hong Kong by legislation in 1935 in the wake of disputes between sandmen and villagers and imminent shortages of sand. Arguably, a monopoly at this stage of Hong Kong's development was a better alternative to merely defining rights over sand extraction in terms of the transaction costs of enforcement. During the 1950s and 1960s, when Hong Kong's economy and construction industry began to boom, the monopoly's existence was further justified due to the politics of China being the sole source of Hong Kong's sand supply. However, this case study of the sand monopoly and its postwar operation as a bilateral monopoly shows that it did not protect coastal villagers, as violations of the sand law were not infrequent. The local sand supply was huge, and its abolition in 1981 was followed by a long period of falling, rather than rising, real wholesale prices of the resource. Nor was there any sign of scale economies, as claimed by the government. The policy implications of this are discussed. "Where monopoly rests on man-made obstacles to enter into a market, there is every case for removing them." (Hayek 1960:pp.265-266

International Business Negotiations: Search of the Balance and the Equilibrium of Negotiating Powers, under Distorting Market Conditions of Competition (Monopsony, Oligopsony and Monopoly Cases)

“…And this is more difficult to be measured, neither the number of participants in the market or the market structure. The participants can take part in the buyer's established rules and can compete within the limits for which several suppliers mutually agreed, what are the benefits to the suppliers' interests (Lai et al 2016;Mendoza 2016;Shin 2017). Although the activity against the reduction of competition is illegal, but it that does not mean that cartel doesn't exist.…”

“…Open competition means that the market entry barriers are sufficiently low. In this case, the profits of market participants are not too large, otherwise would come new participants that would try to sell with lower profits, which would in fact be useful to customers, and thus to ensure its sales (Mumuni et al 2016;Lai et al 2016;Shin 2017).…”

“…Accordingly, all suppliers are taking part in competitions, but it is known in advance which from the suppliers will sign a contract. Market sharing often occurs there dominated by a few suppliers when buyers are fragmented and uncoordinated (Lai et al 2016;Mendoza 2016;Matsumoto, Szidarovszky 2015).…”

“…There are three types of cartel (Rogers 2013;Lai et al 2016;Mendoza 2016;Matsumoto, Szidarovszky 2015):…”

“…The distortion of market competition conditions and circumstances, examined the following scientists: monopsony cases - Dassiou and Glycopantis (2008);OECD (2008);Matsudaira (2014);Danziger (2010); Bonanno and Lopez (2012); Barr and Roy (2008);Brennan (2011);Melnikas and Smaliukienė (2007); Strobl and Walsh (2007); monopoly cases -Mirman et al (2014);Rogers 2013;Braido and Shalders (2015); Sarafopoulos (2015); Jablanovic (2013); Willington and Ning (2014); Mumuni et al (2016); Lai et al (2016);Mendoza (2016); Matsumoto and Szidarovszky (2015); Kováč and Žigić (2016);Shin (2017).…”