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If you have a higher than market price, then other players can come in and disrupt your monopoly. If you are selling stuff at a loss to drive other players out
by Caprinicus 11y ago
If you have a higher than market price, then other players can come in and disrupt your monopoly. If you are selling stuff at a loss to drive other players out of the market, then it is impossible for a new player to get off the ground. The definition has more to do with what is in the long term detrimental to the market's diversity.
- WalterBright 11y agoWhat price to charge? 1. higher - gouging, profiteering, monopolistic rents 2. same - collusion, price fixing 3. lower - unfair competition, predatory pricing All are illegal!
- dhimes 11y agoNone is illegal if you don't have a monopoly.
- WalterBright 11y agoSo if you do have a monopoly, what is the legal price to charge?
- dhimes 11y agoThe monopoly is what is illegal, not the price you charge.
- robotresearcher 11y agoIt's not illegal to have a monopoly. It's illegal to exploit it in certain ways.
- dhimes 11y agoThis is mostly a distinction without a difference in practice. Exploit it in certain ways and your monopoly gets broken apart- thus illegal. See ATT/ Ma Bell
- robotresearcher 11y agoIt's a very practical distinction since you can avoid exploiting it in certain ways and thus not get into any trouble at all. Violator monopolies do not exert predatory pricing, etc, by accident.
- dhimes 11y agoVery good point.
- arjie 11y agoI'm fairly certain none of those things are illegal. You've just incompletely specified the problem and are consequently reaching the wrong conclusion. It's true that all of those things _can_ be illegal, just like moving your hand or your foot can be illegal if you do so with sufficient force against a person, and not moving your hand or foot can be illegal if you, say, are stopping police from enforcing the law. But that doesn't mean "moving my hands" and "not moving my hands" are crimes. Charging higher prices as a monopoly is not in itself illegal. Other conditions have to be true. Collusion and price fixing require you to conspire. Charging lower than someone else while being a monopoly is not illegal either. The FTC has a little page for this: https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost https://www.ftc.gov/tips-advice/competition-guidance/guide-a...