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Hmm, I don't think the original post was clear enough. The problem was with using money to prevent your competitors from doing business. Doing so subverts the
by peyton 11y ago
Hmm, I don't think the original post was clear enough.
The problem was with using money to prevent your competitors from doing business. Doing so subverts the free market.
Suppose every time a competitor rented office space, you bought the building and evicted them.
Suppose Walmart opens a store in SoMa that sells groceries at a tenth of what surrounding stores sell, then jacks prices when those stores fold.
To ELI5: you run a lemonade stand. Your neighbor Susie also has a lemonade stand. Susie's mom doesn't like your parents and wants you to fail, so she pays the store $500 to not sell you lemonades. Yeah, the market price of exclusive lemonade rights is now $500, but unreasonable sums are being spent to prevent competition. Something's wrong.
There are laws against most anticompetitive practices, but not all. Part of the motivation behind the poaching agreement was filling a gap. This was illegal.
- ksk 11y agoExtending your logic, suppose one company spends a hundred million on online marketing and you can spend $80. Guess who goes out of business first? More money wins over less money. There is no way to get around that without fundamentally altering the economic model.
- pacala 11y agoThere are 100 stores on a 20 miles radius. Surely Susie's mom has better things to do than to spend $50,000 and untold time to convince the managers of every single store in the metro to not sell lemons to u/peyton.