5 ms·

Well, if you only consider interactions of two people, you have already decided to ignore power dynamic in your model. Just consider the simplest case of how i

Well, if you only consider interactions of two people, you have already decided to ignore power dynamic in your model. Just consider the simplest case of how it can happen that someone has power over someone else despite having same real strength. Person A comes to person B and says: "If you don't do what I say, I will have me and person C to beat you up." Since B doesn't know C, he would better comply. Then person A comes to person C and says: "If you don't do what I say, I will have me and person B to beat you up." C doesn't know B either, so he has to comply. Now A has (some small amount of) power over B and C. This power could be easily broken if B and C would meet and talked about A's bluff (this is actually the price A pays in higher risk of B and C finding out). Now you may observe in the example that neither interaction was about just two parties; every interaction was about all three parties. So to be able to discuss power, you need to have interactions that involve at least three parties, and also some information hiding. (In fact, as an aside, I believe that for any n there exist n-person games that cannot be accurately modeled via any series of (n-1)-person games, and the above is just example for n=3.) > The stories about monopolies of market power from the morgue of the Hearst newspapers Not sure what you refer to here, but I will say this: I consider the idea of free market to be some set of rules of how people conduct business. These rules then can lead to (moral) failures, such as accumulation of wealth and power. This can be seen not only in the real world, but also by putting those rules into a computer and running a simulation. Many people apparently don't agree with this approach. If I point to a market failure, such as monopoly, they will say "but this is not really a free market". Well, with such a definition of free market, you deliberately didn't allow for failure. But unfortunately, this approach doesn't give you rules that you can just apply and get whatever you call the free market.

ArkyBeagle 11y ago
Beating people up isn't market activity - it's at least borderline criminal. Every 14 year old Libertarian will bleat "but that's force" and they'd be right :) I agree wholeheartedly - you can't get two, much less three people to agree on market failures. My bias is that they simply don't happen or only happen very rarely , that wealth and power are almost completely illusory and conflate status and money to an embarrassing degree. I think that some people like stories about oppression ( I used to be one of those people ) and that this explains much of how it is that people disagree about this. A good way to challenge this belief is to read "Chief", a bio of Hearst by David Nasaw. This is why I refer to the Hearst morgue as feedstock for history - it's a lot bunk in that role, but every single person who reads history in what americans call high school gets it full in the face, and it takes some doing to get past it.
- asgard1024 11y ago
  > Beating people up isn't market activity - it's at least borderline criminal. The beauty of the example is that you don't have to beat people up. What is only needed is A to risk more than B and C. The point was though you cannot prevent this kind of activity taking place on the market (it can actually be reformulated through money and investment, existence of which also requires 3 parties). So by using 2-party model only, you are missing a good chunk of reality here. > My bias is that they simply don't happen or only happen very rarely , that wealth and power are almost completely illusory I guess we can agree we live in a different reality, then :-)
mariodiana 11y ago
When you bring up the idea of monopoly, you're failing to distinguish between coercive monopolies and market monopolies. A coercive monopoly is when government protects the monopolist by giving it favored legal status. That's not a market failure, but a political one. A market monopoly is when, absent any government intrusion, one producer manages to do a job so efficiently that it doesn't pay anyone else to compete. That's not a market failure either. Competition still exists even without actual competitors, since the potential for competitors to enter the market is ever present, should the monopolist abuse the consumer.
- asgard1024 11y ago
  I disagree. I think the monopolist (or bigger company in general) has more options, regardless whether or not it's government backed. At the very least, bigger companies can afford to play chicken game with safer margin of error. Having more options translates to having more power in keeping the market position. Just one example out of many. Microsoft preinstalls Windows on PCs. I can't get e.g. a Linux one because every time someone tries to sell them, Microsoft will signal to the seller that they will have to change the terms of contract with them. Since no seller can really afford to lose MS, they will always cave in and forget about the Linux deal. This is how "the market" actually works in the real world. > Competition still exists even without actual competitors, since the potential for competitors to enter the market is ever present, should the monopolist abuse the consumer. I am sorry, I don't buy this, this is wishful thinking. You're basically telling me that someone abusive will not abuse even if he knows there is nothing to stop them, just because there is always a possibility that something to stop them will suddenly appear out of thin air?
  - mariodiana 11y ago
    What would stop Dell, HP, and Lenovo from banding together and telling Microsoft that they will be installing Linux? Two things. First, there is no appreciable demand in the consumer market for Linux, and there very likely will never be. I don't mean to antagonize Linux aficionados, but that's not the fault of the Evil Empire of Redmond. So, it's simply not worth it for these companies to bother. It's not a "market failure" because a fringe group of consumers are inconvenienced. You make this sound like an orphan drug. Second, and more importantly, Dell, HP, and Lenovo are not free to combine and stand up to Microsoft. U.S. antitrust laws would shut that down immediately. In other words, government interference is contributing to this problem you're lamenting. That's not a "market failure" either -- it's a political failure. As to established, profitable companies "having more options," as you say; it's just as easily said that smaller, newer companies are more nimble and able to spot undeveloped, unsatisfied niches in consumer demand. That's called competition -- sometimes the puncher wins, and sometimes the boxer wins. And, finally, I never said that no one would ever try to "abuse" the consumer. What I'm saying is that there is always the threat of competition acting as a corrective.

ArkyBeagle 11y ago

Beating people up isn't market activity - it's at least borderline criminal. Every 14 year old Libertarian will bleat "but that's force" and they'd be right :) I agree wholeheartedly - you can't get two, much less three people to agree on market failures. My bias is that they simply don't happen or only happen very rarely , that wealth and power are almost completely illusory and conflate status and money to an embarrassing degree. I think that some people like stories about oppression ( I used to be one of those people ) and that this explains much of how it is that people disagree about this. A good way to challenge this belief is to read "Chief", a bio of Hearst by David Nasaw. This is why I refer to the Hearst morgue as feedstock for history - it's a lot bunk in that role, but every single person who reads history in what americans call high school gets it full in the face, and it takes some doing to get past it.

asgard1024 11y ago
> Beating people up isn't market activity - it's at least borderline criminal. The beauty of the example is that you don't have to beat people up. What is only needed is A to risk more than B and C. The point was though you cannot prevent this kind of activity taking place on the market (it can actually be reformulated through money and investment, existence of which also requires 3 parties). So by using 2-party model only, you are missing a good chunk of reality here. > My bias is that they simply don't happen or only happen very rarely , that wealth and power are almost completely illusory I guess we can agree we live in a different reality, then :-)

mariodiana 11y ago

When you bring up the idea of monopoly, you're failing to distinguish between coercive monopolies and market monopolies. A coercive monopoly is when government protects the monopolist by giving it favored legal status. That's not a market failure, but a political one. A market monopoly is when, absent any government intrusion, one producer manages to do a job so efficiently that it doesn't pay anyone else to compete. That's not a market failure either. Competition still exists even without actual competitors, since the potential for competitors to enter the market is ever present, should the monopolist abuse the consumer.

asgard1024 11y ago
I disagree. I think the monopolist (or bigger company in general) has more options, regardless whether or not it's government backed. At the very least, bigger companies can afford to play chicken game with safer margin of error. Having more options translates to having more power in keeping the market position. Just one example out of many. Microsoft preinstalls Windows on PCs. I can't get e.g. a Linux one because every time someone tries to sell them, Microsoft will signal to the seller that they will have to change the terms of contract with them. Since no seller can really afford to lose MS, they will always cave in and forget about the Linux deal. This is how "the market" actually works in the real world. > Competition still exists even without actual competitors, since the potential for competitors to enter the market is ever present, should the monopolist abuse the consumer. I am sorry, I don't buy this, this is wishful thinking. You're basically telling me that someone abusive will not abuse even if he knows there is nothing to stop them, just because there is always a possibility that something to stop them will suddenly appear out of thin air?
- mariodiana 11y ago
  What would stop Dell, HP, and Lenovo from banding together and telling Microsoft that they will be installing Linux? Two things. First, there is no appreciable demand in the consumer market for Linux, and there very likely will never be. I don't mean to antagonize Linux aficionados, but that's not the fault of the Evil Empire of Redmond. So, it's simply not worth it for these companies to bother. It's not a "market failure" because a fringe group of consumers are inconvenienced. You make this sound like an orphan drug. Second, and more importantly, Dell, HP, and Lenovo are not free to combine and stand up to Microsoft. U.S. antitrust laws would shut that down immediately. In other words, government interference is contributing to this problem you're lamenting. That's not a "market failure" either -- it's a political failure. As to established, profitable companies "having more options," as you say; it's just as easily said that smaller, newer companies are more nimble and able to spot undeveloped, unsatisfied niches in consumer demand. That's called competition -- sometimes the puncher wins, and sometimes the boxer wins. And, finally, I never said that no one would ever try to "abuse" the consumer. What I'm saying is that there is always the threat of competition acting as a corrective.