7 ms·

I'm not talking about driving down consumer costs, I'm talking about driving down profit. In addition to the usual benefits of any consolidation, Amazon is gene

I'm not talking about driving down consumer costs, I'm talking about driving down profit. In addition to the usual benefits of any consolidation, Amazon is generally not expected to be profitable in the way that grocers are. How can a company trying to maintain profitability compete with a giant who doesn't have to?

stale2002 9y ago
But it DOES drive down consumer costs. Less profit for for-profit businesses means more money for consumers because prices are lower. I don't care about if a bunch of for profit businesses lose money. What I care about is consumers and low prices. It doesn't matter if it is fair. What matters is what is best for consumers. What you are effectively arguing is "Amazon is too awesome, and too good for consumers. Their prices are so low, that other companies, that offer a WORSE product for a WORSE price, are unable to compete". And that to me makes no sense.
- pdeuchler 9y ago
  Oh i'm sure consumers will love getting their expensive whole foods groceries at bargain prices for 5 years, until amazon has pushed everyone else out of the business, solidified a monopoly, and jacks up prices.
  - stale2002 9y ago
    People keep saying that the inevitable Amazon price raise will happen. Amazon has been around for 20 years "monopolizing" every market that it enters. And those doomsday price raises have yet to materialize.
- komali2 9y ago
  Wait, but here's the argument: - Whole Foods no longer needs to be profitable because it's a subsidy of Amazon - Whole Foods will thus drive down prices Hold on, why? Because driving down prices will drive out competition. There's ample historical evidence for the inevitable result of this, which is - Whole Foods leverages its new monopoly after murdering all competition by raising prices. https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing
  - enoch_r 9y ago
    Can you provide a few examples of the ample historical evidence for that "inevitable result"? I'm looking for one or two cases where a private monopolist entered a competitive market, managed to shut down competitors with predatory pricing, and then raised prices afterwards to higher levels than when they entered the market. This is one of those claims that sounds plausible, but I've yet to encounter a historical case of it actually occurring.
    - electricEmu 9y ago
      Microsoft and Internet Explorer is pretty close. Browsers sold for money. Microsoft entered the browser market and undercut it. Through market dominance they owned the market requiring anyone that wanted to access some parts of he web intact on Windows.
      - sokoloff 9y ago
        As a consumer now, is the problem that I have to save up my money and carefully choose which expensive web browser to "buy"? At most, that's evidence of a new dynamic coming to a market, but I don't see the evidence of consumer harm from the phase 2 raising of prices in the browser market.
      - stale2002 9y ago
        Ok, internet explorer. At what point in history did microsoft drive out all its competitors, and then raise prices? Oh wait. Never. They never raised prices and kept internet explorer free forever.
        deleted 9y ago
        [deleted]
    - didgeoridoo 9y ago
      That's because it hasn't happened. It is simply a highly-plausible fantasy used to justify government interventions in fully-functioning markets. Economist Thomas DiLorenzo has actually studied this, and has found that, in the vast majority of cases, monopolies are associated with a dramatic (edit: permanent) reduction in prices. He found only two cases that actually followed the "predatory pricing" script (edit: that is, where prices dropped over time and then rose when monopoly power was achieved) — and those were trivial monopolies in the markets for matches and castor oil in the early 20th century. (Edit: remove FTC comment, as it is besides the point and not strictly accurate)
- ForrestN 9y ago
  This can apply to any monopoly that undercuts on price to destroy competition. Can't you imagine the danger of a scenario in which super-high capitalization + magical shareholder expectations = "awesome" enough to destroy competitors? Is regulating markets to protect competition ever a good idea? Also, the premise that "consumers" are a monolithic group is mistaken. What's good for comfortable consumers in wealthy places is not necessarily also good for poor consumers. Is Amazon Whole Foods going to serve 100% of the United States? Can you imagine them destroying the business of a company and then choosing not to serve all of that company's customers? Amazon's "awesome" prices are artificially low (like Uber's, for example) due to subsidy from investors. This indicates an intent to compete and then raise prices.
  - stale2002 9y ago
    Amazon has been monopolizing markets with low prices for 20 years. And people have been saying that the inevitable price increase is just around the corner. And yet those price increases have yet to come. So tell me, when will THESE price increases come around? Maybe in Another 20 years?
- cakedoggie 9y ago
  > I don't care about if a bunch of for profit businesses lose money. > What I care about is consumers and low prices. You are being short-sighted then. Come in, drive the others out of business, then feel free to raise prices with no competition. It has happened multiple times before.
- canes123456 9y ago
  Your statement only makes sense in with the US antitrust laws. The proxy for consumer harm the US uses is prices which is a very narrow view. This is the reason why Amazon with 90% of the ebook market could be the victim of Antitrust vs Apple. Long term competition matters even if consumers have low prices right now. EU for example works differently. These articles will give more nuance: https://stratechery.com/2016/antitrust-and-aggregation/ https://stratechery.com/2016/antitrust-and-aggregation/ https://stratechery.com/2017/manifestos-and-monopolies/ https://stratechery.com/2017/manifestos-and-monopolies/

stale2002 9y ago

But it DOES drive down consumer costs. Less profit for for-profit businesses means more money for consumers because prices are lower. I don't care about if a bunch of for profit businesses lose money. What I care about is consumers and low prices. It doesn't matter if it is fair. What matters is what is best for consumers. What you are effectively arguing is "Amazon is too awesome, and too good for consumers. Their prices are so low, that other companies, that offer a WORSE product for a WORSE price, are unable to compete". And that to me makes no sense.

pdeuchler 9y ago
Oh i'm sure consumers will love getting their expensive whole foods groceries at bargain prices for 5 years, until amazon has pushed everyone else out of the business, solidified a monopoly, and jacks up prices.
- stale2002 9y ago
  People keep saying that the inevitable Amazon price raise will happen. Amazon has been around for 20 years "monopolizing" every market that it enters. And those doomsday price raises have yet to materialize.
komali2 9y ago
Wait, but here's the argument: - Whole Foods no longer needs to be profitable because it's a subsidy of Amazon - Whole Foods will thus drive down prices Hold on, why? Because driving down prices will drive out competition. There's ample historical evidence for the inevitable result of this, which is - Whole Foods leverages its new monopoly after murdering all competition by raising prices. https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing
- enoch_r 9y ago
  Can you provide a few examples of the ample historical evidence for that "inevitable result"? I'm looking for one or two cases where a private monopolist entered a competitive market, managed to shut down competitors with predatory pricing, and then raised prices afterwards to higher levels than when they entered the market. This is one of those claims that sounds plausible, but I've yet to encounter a historical case of it actually occurring.
  - electricEmu 9y ago
    Microsoft and Internet Explorer is pretty close. Browsers sold for money. Microsoft entered the browser market and undercut it. Through market dominance they owned the market requiring anyone that wanted to access some parts of he web intact on Windows.
    - sokoloff 9y ago
      As a consumer now, is the problem that I have to save up my money and carefully choose which expensive web browser to "buy"? At most, that's evidence of a new dynamic coming to a market, but I don't see the evidence of consumer harm from the phase 2 raising of prices in the browser market.
    - stale2002 9y ago
      Ok, internet explorer. At what point in history did microsoft drive out all its competitors, and then raise prices? Oh wait. Never. They never raised prices and kept internet explorer free forever.
      - deleted 9y ago
        [deleted]
  - didgeoridoo 9y ago
    That's because it hasn't happened. It is simply a highly-plausible fantasy used to justify government interventions in fully-functioning markets. Economist Thomas DiLorenzo has actually studied this, and has found that, in the vast majority of cases, monopolies are associated with a dramatic (edit: permanent) reduction in prices. He found only two cases that actually followed the "predatory pricing" script (edit: that is, where prices dropped over time and then rose when monopoly power was achieved) — and those were trivial monopolies in the markets for matches and castor oil in the early 20th century. (Edit: remove FTC comment, as it is besides the point and not strictly accurate)
ForrestN 9y ago
This can apply to any monopoly that undercuts on price to destroy competition. Can't you imagine the danger of a scenario in which super-high capitalization + magical shareholder expectations = "awesome" enough to destroy competitors? Is regulating markets to protect competition ever a good idea? Also, the premise that "consumers" are a monolithic group is mistaken. What's good for comfortable consumers in wealthy places is not necessarily also good for poor consumers. Is Amazon Whole Foods going to serve 100% of the United States? Can you imagine them destroying the business of a company and then choosing not to serve all of that company's customers? Amazon's "awesome" prices are artificially low (like Uber's, for example) due to subsidy from investors. This indicates an intent to compete and then raise prices.
- stale2002 9y ago
  Amazon has been monopolizing markets with low prices for 20 years. And people have been saying that the inevitable price increase is just around the corner. And yet those price increases have yet to come. So tell me, when will THESE price increases come around? Maybe in Another 20 years?
cakedoggie 9y ago
> I don't care about if a bunch of for profit businesses lose money. > What I care about is consumers and low prices. You are being short-sighted then. Come in, drive the others out of business, then feel free to raise prices with no competition. It has happened multiple times before.
canes123456 9y ago
Your statement only makes sense in with the US antitrust laws. The proxy for consumer harm the US uses is prices which is a very narrow view. This is the reason why Amazon with 90% of the ebook market could be the victim of Antitrust vs Apple. Long term competition matters even if consumers have low prices right now. EU for example works differently. These articles will give more nuance: https://stratechery.com/2016/antitrust-and-aggregation/ https://stratechery.com/2016/antitrust-and-aggregation/ https://stratechery.com/2017/manifestos-and-monopolies/ https://stratechery.com/2017/manifestos-and-monopolies/