Economics: What a monopoly isn't.

[Hanarchy Montanarchy]

The logic of anti-trust is about benefiting the consumer.

The first hardware store that opens up somewhere could be described as a regional monopoly, but that isn't, itself, a problem, since having a hardware store is good for people who want to consume hardware. However, that hardware store has plenty of anti-competitive options that don't involve state force. You could, of course, describe those practices as just being savvy at business, and you wouldn't be wrong, but they can also wind up harming the consumer.

And, not for nothing, but companies like Google or Facebook might not be monopolies, but they do engage in plenty of anti-competitive business practices. So effectively, in fact, that the goal of most start-ups is not to compete with one of the big players, but to create some little piece of tech that is just interesting enough to be worth buying.

[DBTrek]

I think the boondoggle here is labeling competitive practices anti-competitive.

“Hey, you lowered your prices to a point your competition can’t match because you want to steal their customers away! You might even be taking a loss on that item!”

“Right. This is a business. If I am taking a loss then this low price is unsustainable. I guess they’ll have to wait me out to see.”

“That’s anti-competitive!”


... yet it doesn’t hurt consumers at all when prices go down.

The business can neither prevent competitors from arising and they’ve only benefited consumers by lowering prices. What is the government saving us from here?

[Hanarchy Montanarchy]

Temporarily lowering prices is only one method.

If you have enough leverage you can set up exclusive deals with suppliers, buying and then dismantling upstarts, et cetera.

It is anti-competitive in that it keeps out competition.

You've set up a nice tautology, DB, around the concept of 'preventing.' Only the state can 'prevent' competitors in either a legal or otherwise compulsive sense, so it is only government that creates monopolies, by definition, and anything that isn't the government is just savvy business practice.

Even accepting the logical mobius of those terms, that doesn't exclude the possibility that 'savvy business practices' from the perspective of controlling the market and seeking profits might harm consumer choice.

[DBTrek]

Well, I’ve laid out my reasons for claiming that government is instrumental in creating monopolies because they are the only ones that can forbid competition. I’ve demonstrated how market share is not necessarily a factor in whether a monopoly exists or not. I’ve shown that government has repeatedly exercised it’s anti-trust powers on mergers effecting less than 9% of a given market, and on parties that later went bankrupt.

What I’m really hoping people get from this, whether or not they agree with my reasoning, is inspired to revisit what they think constitutes a monopoly.

Because monopolies actually are bad for economies. Monopolies introduce inefficiencies the same as central planning (as in, both introduce inefficiencies though not the same way).

But success isn’t a monopoly. And it seems to me the media and the political class use the term “monopoly” inappropriately , and often enough to sow widespread confusion over what a monopoly is.

[Hanarchy Montanarchy]

I don't know the details, but 9% of a market might be 100% of a regional market.

Either way, the process is: if you think some business is in need of some trust busting, you make your case, they defend themselves, and the magistrate decides.

Completely eliminating the anti-trust mechanism because you don't trust the state, or it makes mistakes, seems fraught.

More abstractly though, it is very difficult to make the case for regulations because assembling evidence of all the problems that didn't arise thanks to an anti-trust decision is an impossible task.

And, sure, the media doubtlessly uses the term freely, and often inaccurately. What else is new?

[nmoore63]

In the united states today, the vast majority of monopoly practices are made possible by the government regulatory state, or the current legal morass.

[jediuser598]

Hey DB, mind helping me out? Looking for a definition or two from you.

"if something prevents competitors from entering your market, then you're a monopoly."

Are you talking about high barrier of entry? Or just anything at all? I'm unclear on this.

"If competition can occur, that market segment is not under a monopoly."

The more I'm reading into it, the government seems to be focused on policing competition. As in, the government wants to preserve said competition, wants to have an even playing field for products to be able to compete. They are specifically against that high barrier of entry other businesses might create. But regulatory capture can be some of the highest barriers of entry that one can think of.

The studies I'm reading say that having a higher market share increased profitability:

The earlier article established a link between strategic planning and profit performance; here, with additional data, the authors come up with a positive correlation between market share and ROI. The authors discuss why market share is profitable, listing economies of scale, market power, and quality of management as possible explanations; then, using the PIMS data base, they show how market share is related to ROI. Specifically, as market share increases, a business is likely to have a higher profit margin, a declining purchases-to-sales ratio, a decline in marketing costs as a percentage of sales, higher quality, and higher priced products. Data also indicate that the advantages of large market share are greatest for businesses selling products that are purchased infrequently by a fragmented customer group. The authors also analyze the strategic implications of the market-share/ROI relationship. They conclude by advising companies to analyze their own positions in order to achieve the best balance of costs and benefits of the different strategies.

https://hbr.org/1975/01/market-share-a- ... fitability

I could list more studies but you get the idea, the more market share you have, the greater your profits are.

This is a complex issue, guess I'm going to have to go to the library . Sucks that most of the studies I want are behind a damn pay wall.

What do you think about Corporations engaging in violence against a government? Or against people?

If the government didn't have a monopoly on violence, would it be better or worse?

[heydaralon]

Hey DB, mind helping me out? Looking for a definition or two from you.

"if something prevents competitors from entering your market, then you're a monopoly."

Are you talking about high barrier of entry? Or just anything at all? I'm unclear on this.

"If competition can occur, that market segment is not under a monopoly."

The more I'm reading into it, the government seems to be focused on policing competition. As in, the government wants to preserve said competition, wants to have an even playing field for products to be able to compete. They are specifically against that high barrier of entry other businesses might create. But regulatory capture can be some of the highest barriers of entry that one can think of.

The studies I'm reading say that having a higher market share increased profitability:

The earlier article established a link between strategic planning and profit performance; here, with additional data, the authors come up with a positive correlation between market share and ROI. The authors discuss why market share is profitable, listing economies of scale, market power, and quality of management as possible explanations; then, using the PIMS data base, they show how market share is related to ROI. Specifically, as market share increases, a business is likely to have a higher profit margin, a declining purchases-to-sales ratio, a decline in marketing costs as a percentage of sales, higher quality, and higher priced products. Data also indicate that the advantages of large market share are greatest for businesses selling products that are purchased infrequently by a fragmented customer group. The authors also analyze the strategic implications of the market-share/ROI relationship. They conclude by advising companies to analyze their own positions in order to achieve the best balance of costs and benefits of the different strategies.

https://hbr.org/1975/01/market-share-a- ... fitability

I could list more studies but you get the idea, the more market share you have, the greater your profits are.

This is a complex issue, guess I'm going to have to go to the library . Sucks that most of the studies I want are behind a damn pay wall.

What do you think about Corporations engaging in violence against a government? Or against people?

If the government didn't have a monopoly on violence, would it be better or worse?

A gov't without a monopoly of violence is not a government... Or at least not a real one..

[DBTrek]

Hey DB, mind helping me out? Looking for a definition or two from you.

"if something prevents competitors from entering your market, then you're a monopoly."

Are you talking about high barrier of entry? Or just anything at all? I'm unclear on this.

Prevention is 100%. A high barrier to entry isn't prevention, though I suppose a high enough barrier might be virtually indistinguishable from prevention. If, say, someone owns 98% or a resource like aluminum, they're probably close enough to monopolizing that resource that the ownership of other 2% is irrelevant.

Think of utilities - they're monopolies. The government controls them, you and I can't compete against them. We can't start our own "Seattle Power Co", the barrier to entry is a big fat "NO" from the government. That's a monopoly. That's prevention of competition.

[heydaralon]

Hey DB, mind helping me out? Looking for a definition or two from you.

"if something prevents competitors from entering your market, then you're a monopoly."

Are you talking about high barrier of entry? Or just anything at all? I'm unclear on this.

Prevention is 100%. A high barrier to entry isn't prevention, though I suppose a high enough barrier might be virtually indistinguishable from prevention. If, say, someone owns 98% or a resource like aluminum, they're probably close enough to monopolizing that resource that the ownership of other 2% is irrelevant.

Think of utilities - they're monopolies. The government controls them, you and I can't compete against them. We can't start our own "Seattle Power Co", the barrier to entry is a big fat "NO" from the government. That's a monopoly. That's prevention of competition.

Correct me if I'm wrong, but doesn't this utility monopoly cut both ways? I agree that utilities are an almost textbook case of "gov't induced monopolies." But, I remember a conversation with a dude who worked for Duke Energy who told me that usually one of the conditions of this collusion is that there are ceilings induced on how much utility companies can charge for their services, and gov't aid when the shit hits the fan (ie: hurricane, flood) to get the grid working again ASAP. This is not all bad, no? Weigh in if you don't mind..