> Because if they don't, someone will shoot them. Unlike a government, the
> PPAs have no monopoly on force.
> Because their customers will move to another PPA or shoot them.
You seem to assume a population primarily composed of freedom-loving individualists who are ready and willing to die to prevent any infringement of their rights. The only way you are ever going to get that is if you and a few hundred of your friends move to Luna and found a new society.
In the real world, most people are afraid of large groups of armed men. A PPA with a million customers might have tens of thousands who would fight in self defense, but only one or two would be willing to pull the lone gunman routine.
If a PPA doesn't allow itself to be sued, most people won't even notice unless it takes blatant advantage of its immunity. If it becomes common practice for PPAs to give themselves that kind of loophole, most people will just decide they have to live with it. A PPA can get away with all sorts of slimy double-dealing this way, as long as the public relations fallout isn't too bad.
> >2) There is nothing to stop PPAs from colluding to fix the market. If
> >two biggest providers in Houston decide to team up, kick out the
> >competition by force, and divide the market, my only recourse is to
> In order to kick the competition out by force, they're going to have to
> fight a war, and that's expensive. It gets really expensive when your
> old customers all stop paying you and start paying the competitors who
> you are fighting; and since all your customers are armed, trying to force
> them to pay you is going to get really, really expensive.
You're assuming the PPAs are stupid. It seems more realistic to assume they are run by intelligent people who want to maximize their bottom line.
Let's say mega-PPA A and mega-PPA B together have a majority share of the market in my town, and they decide to engage in a bit of price-fixing. The first thing they do is start squeezing the little companies. Since a small competitor can't operate effectively unless it has a mutual-enforcement agreement with the big guys, all they have to do is play hardball on the contract terms. PPAs A & B insist on very favorable terms for their clients, charge the smaller companies large 'processing fees', and so on. Over the course of a few years it should be pretty easy to squeeze out the minor players.
Then they raise their prices, start levying opt-out fees, and generally act like monopolists. As long as the extra charges amount to less than the cost of moving to another city, very few people will actually leave. Any new competitor that attempts to enter the market can be dealt with the same way.
This process is pretty simple, so we should expect it to be a common scenario. That, of course, only strengthens the hand of the PPAs. The more common monopolistic pricing becomes, the harder it is for people to move elsewhere to escape it. This also leads to a market dominated by a few big companies, which means that it is easier to arrange large-scale collusion.
Now, I'm sure you'll point out that people can simple opt not to pay anyone for police protection. But if they do, that means that they have no recourse if someone does commit a crime against them. In particular, it means that they have no one to turn to if the local PPA sends a squad of goons over to 'convince' them to renew their contract.
Billy Brown, MCSE+I