4 ms·

I'm going to remember that term. Do you think it's possible to quantify that concept?

by ColanR 10y ago

neom 10y ago
I'm a crappy economist. In theory I think it should be somewhat/somehow linked to productivity. If a company positively impacts national productivity the company would be a "bottom line" company?
- roymurdock 10y ago
  The term you're looking for is "natural monopoly". These companies are all so large and old because they were the first players in markets where returns to scale are staggering, and barriers to entry are almost impossibly high to overcome. Most of them were blocked from actually becoming horizontal or vertical monopolies by governments in order to protect consumers and foster innovation. But that didn't stop them from acquiring tangential companies and becoming multinational conglomerates - every country in the world needs Kraft's consumer goods and GE's industrial equipment. Software startups follow an entirely different business model - extremely low costs to entry, entering new markets with high rates of failure. Also, in many successful acquisition exits the startups are acquired and the brand disappears.
  - djrogers 10y ago
    > The term you're looking for is "natural monopoly". Not really - a natural monopoly occurs where early entrants have such a huge advantage in providing goods or services that competitors are not able to sprout up. It may be due to high capital costs, regulation, distribution channels, or even controlling material supply. Companies like Jet Blue are clearly not natural monopolies - in fact as a relatively young airline they were able to establish that the Airline industry is not subject to natural monopolies (although the capital costs to start up are very high). Kraft on the other hand has a ton of competition, with more new food producers popping up every year. The capital costs to start are not that high, and distribution channels are open enough that lots of smaller companies can get exposure to customers.
- ColanR 10y ago
  I guess so. Seems like the companies you listed all deal with 'basic human survival' - in 1st world countries, things people need in order to achieve an above average financial state. So not google, facebook, uber, etc. because you can do really well without them. And the ones you mentioned, GE, AT&T, CN, JetBlue, Mondelez International (Kraft), are much closer to to providing actual necessities - you can't do a ton without household machinery (e.g. food prep equipment), or cheap food; cheap long-distance transportation can be crucial to success, as would be phones.

I'm going to remember that term. Do you think it's possible to quantify that concept?

by ColanR 10y ago

I'm going to remember that term. Do you think it's possible to quantify that concept?

neom 10y ago

I'm a crappy economist. In theory I think it should be somewhat/somehow linked to productivity. If a company positively impacts national productivity the company would be a "bottom line" company?

roymurdock 10y ago
The term you're looking for is "natural monopoly". These companies are all so large and old because they were the first players in markets where returns to scale are staggering, and barriers to entry are almost impossibly high to overcome. Most of them were blocked from actually becoming horizontal or vertical monopolies by governments in order to protect consumers and foster innovation. But that didn't stop them from acquiring tangential companies and becoming multinational conglomerates - every country in the world needs Kraft's consumer goods and GE's industrial equipment. Software startups follow an entirely different business model - extremely low costs to entry, entering new markets with high rates of failure. Also, in many successful acquisition exits the startups are acquired and the brand disappears.
- djrogers 10y ago
  > The term you're looking for is "natural monopoly". Not really - a natural monopoly occurs where early entrants have such a huge advantage in providing goods or services that competitors are not able to sprout up. It may be due to high capital costs, regulation, distribution channels, or even controlling material supply. Companies like Jet Blue are clearly not natural monopolies - in fact as a relatively young airline they were able to establish that the Airline industry is not subject to natural monopolies (although the capital costs to start up are very high). Kraft on the other hand has a ton of competition, with more new food producers popping up every year. The capital costs to start are not that high, and distribution channels are open enough that lots of smaller companies can get exposure to customers.
ColanR 10y ago
I guess so. Seems like the companies you listed all deal with 'basic human survival' - in 1st world countries, things people need in order to achieve an above average financial state. So not google, facebook, uber, etc. because you can do really well without them. And the ones you mentioned, GE, AT&T, CN, JetBlue, Mondelez International (Kraft), are much closer to to providing actual necessities - you can't do a ton without household machinery (e.g. food prep equipment), or cheap food; cheap long-distance transportation can be crucial to success, as would be phones.