> If quality gets too bad, or prices get too high, someone is going to come and try to eat their lunch.
The problem is that in monopoly, things have to be really, really bad and prices must be really outrageous before anything changes. Healthy markets are the opposite - even a minor decrease in value creates a niche that is filled by a competitor.
In a market with strong network effects (e.g., operating systems), you are correct. It costs money to switch from windows to linux, and this may preclude a switch for a small cost gain.
In a market for commodity goods, this is not true. It costs nothing to switch from Alcoa aluminum to little guy aluminum.
And that's precisely why monopolies rarely form (not impossible, but really difficult) in commodity markets.
Anyway, it's not as important as when the monopoly is established. Any competition would have to bootstrap itself. Until competition is reestablished, market distortions ensue. They can be as large as the barriers that prevent competitors from entering the market.
> The problem is that in monopoly, things have to be really, really bad and prices must be really outrageous before anything changes.
That's the theory, but do you have any examples of a company abusing monopoly power without government backing for any extended period of time? I don't know any examples of a non-government-backed company abusing monopoly power for any considerable length of time without losing market share.
They abused monopoly power to force their OEMs to do their bidding, all the way from punishing IBM for shipping OS/2 computers to preventing Dell and HP from placing software such as AOL's (MSN competitor) and Netscape (we all know that).
They have achieved monopoly and near-monopoly in several categories (office applications, IDEs) and have used it to raise barriers to entry. Every IDE available for Windows is either targeted to a small niche or free and cross-platform.
The problem is that in monopoly, things have to be really, really bad and prices must be really outrageous before anything changes. Healthy markets are the opposite - even a minor decrease in value creates a niche that is filled by a competitor.