Let's say you start a power company in the same area as I, a public power utility.
The board of utilities says that as a regulated monopoly I have to provide power to every parcel within the regulated area.
I charge more than the average cost+ rate so that, on the whole, the denser areas that require less infrastructure can subsidize the less dense rural areas where individuals may require kilometers of dedicated transmission line to service their location.
But you come along and charge less (or give power away), but you only do so in areas where it is either profitable or minimally loss-making.
>but Spooner dropped his rates even lower -- delivering many letters for free.
And you don't do this to run a competing enterprise, but to make a socio-economic/political point.
So all of my customers in the limited areas that you serve, naturally, switch to you.
But the areas you choose to serve, the densely-populated ones, are the areas that I need to fulfill my mission of delivering electricity to everyone.
No longer able to subsidize sparsely-populated areas, I either have to raise rates or give up.
"Well that's just the free market" is baloney. A utility's purpose is to serve its population.
A mail service's purpose is to deliver letters to everyone.
In countries where postal service is "privatized" there is still only one letter delivery service-- it's just run by a board instead of the government.
And those "privatized" postal services still have a universal service mandate, required by the law that privatized the formally nationalized entities.
As an aside, the UK's Royal Mail was privatized a couple of years ago. It was sold off at bargain-basement prices, ripping off the taxpayers, to investors who just happened, coincidentally, to be donors to politicians who were in charge at the time. Its "universal service" mandate expires next year.
We'll see how the FrEe MaRkEt handles universal service when not forced to by law.
The American Letter Mail Company wasn't competition. It was a vanity project launched for political purposes that wasn't even in the same game as the USPO, much less in competition with it.
