It certainly is a market failure, not a lack of a market, unless you define market differently than the convention I'm familiar with.
This specific form of market failure is a failure in market structure. Of course regulatory failures exacerbated this problem (or at least didn't fix it), but it's not the main "cause" of the failure, by which I mean "would it naturally without any regulation at all?"
Regarding your second paragraph, yes, that is a regulatory burden and it's true that it increases the barriers to entry into the industry, and I suppose that's an argument for why regulation caused market failure. But is it the main cause? I think it's because this particular market structure is inclined to a natural monopoly (or something close) because of the high-fixed-costs nature of the business.
Comments
It certainly is a market failure, not a lack of a market, unless you define market differently than the convention I'm familiar with.
This specific form of market failure is a failure in market structure. Of course regulatory failures exacerbated this problem (or at least didn't fix it), but it's not the main "cause" of the failure, by which I mean "would it naturally without any regulation at all?"
Regarding your second paragraph, yes, that is a regulatory burden and it's true that it increases the barriers to entry into the industry, and I suppose that's an argument for why regulation caused market failure. But is it the main cause? I think it's because this particular market structure is inclined to a natural monopoly (or something close) because of the high-fixed-costs nature of the business.