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Ironically in simultaneous parallel to the 200 years of economic literature we have explaining why it isn't like that, we have 200 years of recorded history exp

by wfo 10y ago

Ironically in simultaneous parallel to the 200 years of economic literature we have explaining why it isn't like that, we have 200 years of recorded history explaining why it is like that. When scientific theory and facts come into a disagreement, theory walks away defeated. But when economic theory and facts come into a disagreement, the opposite occurs -- the facts must be reinterpreted properly to fit the theory, of course, so economists may continue on as highly educated cheerleaders for wealthy capitalists. Oligopoly and collusion is nothing more than a succinct description of actual economic history.

saosebastiao 10y ago
Economic literature isn't just philosophical or theoretical, it is empirical as well. The only empirically falsifiable theory here is that monopoly is natural for all businesses. The world's oldest profession, prostitution, has never been run by companies the size of Standard Oil. Neither has wheat, sugar, electricity production, coal, iron, or copper. Only revisionist history would take such a limited view of the economic scope of the world. If monopoly were the economic end state of all industries, surely some of these old industries would have been monopolized by now...or at least they would have been before Anti-Trust law was a thing. Note that that has not ever happened. A natural monopoly only exists in the face of high barriers to entry. Those barriers may be natural, or they may be political, but either way they must be high. Some may be high enough to only have a few competitors, but compete they must do. Collusion is mathematically and empirically unstable. In fact, the economic criteria for cartel success is a) how much profits increase, and b) how long they last. There would be no need for `b` as a success criteria if they were stable.
- fish55 10y ago
  And there is a tendency towards (politically-created) monopoly because only monopolies can concentrate enough wealth to buy elections. Natural or political, the only way to do away with monopolies does not have to do with public/private, but with campaign finance reform.
- imagist 10y ago
  > The world's oldest profession, prostitution, has never been run by companies the size of Standard Oil. This is because of government intervention (it's illegal for Christ's sake). > Neither has wheat, sugar, electricity production, coal, iron, or copper. Wheat has been regulated forever. Sugar--are you not aware of the corn lobby? Electricity production: this is pretty well monopolized regionally. Coal: not yet. Iron: USS wasn't a good enough a monopoly for you? > A natural monopoly only exists in the face of high barriers to entry. Those barriers may be natural, or they may be political, but either way they must be high. Some may be high enough to only have a few competitors, but compete they must do. Collusion is mathematically and empirically unstable. In fact, the economic criteria for cartel success is a) how much profits increase, and b) how long they last. There would be no need for `b` as a success criteria if they were stable. What makes you think that a large company will not create high barriers to entry in their field? When a company reaches a size where they can lobby the government successfully the field ceases to be an even playing field.
  - saosebastiao 10y ago
    > This is because of government intervention (it's illegal for Christ's sake). In the US, of course. There are plenty of places where it is legal, but no monopolies have formed. Even before it was illegal, there was no monopolization. If the timeframe for inevitable monopolization is on the order of millenia, like it has yet to do with Prostitution, well then consider me unimpressed by the argument. > Wheat has been regulated forever. Forever? I'm pretty sure wheat farming predates the existence of the idea of government regulation. And yet, no monopolies. Ever. > Electricity production: this is pretty well monopolized regionally. Distribution is pretty well monopolized (hey, what do you know...an industry with high barriers to entry!). Production, not even close. > Sugar--are you not aware of the corn lobby? You're still just talking about the special case of the US. Open your eyes. > Iron: USS wasn't a good enough a monopoly for you? US Steel wasn't even a monopoly in the US (it peaked at 67% of the US market)...nowhere close to a monopoly world wide. > What makes you think that a large company will not create high barriers to entry in their field? When a company reaches a size where they can lobby the government successfully the field ceases to be an even playing field. So what you're saying is that non-natural Monopolies are the end state of government intervention. I agree. Natural monopolies can exist due to or in spite of government intervention.

by wfo 10y ago

saosebastiao 10y ago

Economic literature isn't just philosophical or theoretical, it is empirical as well. The only empirically falsifiable theory here is that monopoly is natural for all businesses. The world's oldest profession, prostitution, has never been run by companies the size of Standard Oil. Neither has wheat, sugar, electricity production, coal, iron, or copper. Only revisionist history would take such a limited view of the economic scope of the world. If monopoly were the economic end state of all industries, surely some of these old industries would have been monopolized by now...or at least they would have been before Anti-Trust law was a thing. Note that that has not ever happened. A natural monopoly only exists in the face of high barriers to entry. Those barriers may be natural, or they may be political, but either way they must be high. Some may be high enough to only have a few competitors, but compete they must do. Collusion is mathematically and empirically unstable. In fact, the economic criteria for cartel success is a) how much profits increase, and b) how long they last. There would be no need for `b` as a success criteria if they were stable.

fish55 10y ago
And there is a tendency towards (politically-created) monopoly because only monopolies can concentrate enough wealth to buy elections. Natural or political, the only way to do away with monopolies does not have to do with public/private, but with campaign finance reform.
imagist 10y ago
> The world's oldest profession, prostitution, has never been run by companies the size of Standard Oil. This is because of government intervention (it's illegal for Christ's sake). > Neither has wheat, sugar, electricity production, coal, iron, or copper. Wheat has been regulated forever. Sugar--are you not aware of the corn lobby? Electricity production: this is pretty well monopolized regionally. Coal: not yet. Iron: USS wasn't a good enough a monopoly for you? > A natural monopoly only exists in the face of high barriers to entry. Those barriers may be natural, or they may be political, but either way they must be high. Some may be high enough to only have a few competitors, but compete they must do. Collusion is mathematically and empirically unstable. In fact, the economic criteria for cartel success is a) how much profits increase, and b) how long they last. There would be no need for `b` as a success criteria if they were stable. What makes you think that a large company will not create high barriers to entry in their field? When a company reaches a size where they can lobby the government successfully the field ceases to be an even playing field.
- saosebastiao 10y ago
  > This is because of government intervention (it's illegal for Christ's sake). In the US, of course. There are plenty of places where it is legal, but no monopolies have formed. Even before it was illegal, there was no monopolization. If the timeframe for inevitable monopolization is on the order of millenia, like it has yet to do with Prostitution, well then consider me unimpressed by the argument. > Wheat has been regulated forever. Forever? I'm pretty sure wheat farming predates the existence of the idea of government regulation. And yet, no monopolies. Ever. > Electricity production: this is pretty well monopolized regionally. Distribution is pretty well monopolized (hey, what do you know...an industry with high barriers to entry!). Production, not even close. > Sugar--are you not aware of the corn lobby? You're still just talking about the special case of the US. Open your eyes. > Iron: USS wasn't a good enough a monopoly for you? US Steel wasn't even a monopoly in the US (it peaked at 67% of the US market)...nowhere close to a monopoly world wide. > What makes you think that a large company will not create high barriers to entry in their field? When a company reaches a size where they can lobby the government successfully the field ceases to be an even playing field. So what you're saying is that non-natural Monopolies are the end state of government intervention. I agree. Natural monopolies can exist due to or in spite of government intervention.