The Monopoly at Santa Clara
By Derek Kato
Christopher was enjoying his first year of college at Santa Clara University. He loved the weather, made a ton of new friends, and was instructed by many excellent professors. He enjoyed all of his classes, and loved the university so much that he truly believed that it was the most perfect place in the world. It was not until one particular day in his economics class, when the professor lectured on monopolies, that Chris began to realize that the University was not so perfect after all. He began to see the darker side of Santa Clara.
It was while Chris was eating dinner in the Benson dining hall that he realized that he was being taken advantage of by the Bon Appetite dinning service. He looked at the food on his plate and exclaimed, “this food is horrible, it tastes like low grade dog food!” He wondered how the food service company was able to charge such an outrageously high price for food of such low quality, and he realized that Bon Appetite had a monopoly on all of the food at Santa Clara.
Chris thought back to the lecture on monopolies that he had listened to earlier in the day and remembered that a monopoly is a firm that is the sole seller in its market, and it arises when a single firm owns a key recourse. He took a look at the food options around him and realized that every single option was provided by Bon Appetite. This company had a complete monopoly. All of the dining services from Benson to the Mission Café were controlled by Bon Appetite, and therefore there was no competition, and no incentive to provide quality food, or low priced food for the students. Whether the food was the quality of a five star restaurant, or the quality of a federal prison, it did not matter because the students had no other option.
Chris realized that he had only two options when it came to food at the University, he could either eat the Bon Appetite food, or he could starve. This greatly angered Chris. He began to see that by forcing each student who lived on campus to buy a meal plan, the University forced each student to support the monopoly of Bon Appetite, therefore making it stronger and giving it no incentive at all to care about the quality of its food or its ridiculously high prices.
Chris then began to think about what the food situation would be like if there were multiple companies that offered different food options for the students. He realized that even if there were only two companies, the students would feel the positive effects of competition. The quality of the food at the school would be forced way up, and the ridiculously high prices for food would fall. If there was competition, then each food company would try its best to lure students to purchase their food, by trying to top the other company in quality, or by providing food at a lower price. Competition, Chris realized, would be ideal for the students, and would make the school the ideal place that he first thought it was.
Chris decided he needed to take action against this unfair monopoly. He presented the issue to the students in his economics class and they all agreed with him. The students then decided to petition to the school board against renewing the contract with Bon Appetite. They begged the University to allow individual food providers to control dining services for the school so the students would be able to feel the positive effects of competition. The university listened to the students’ arguments, and the next school year, Bon Appetite was removed. Individual restaurants then took over providing food and the result was that quality skyrocketed, prices lowered, and the school was a much better place.