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They are leading in the niche, but that's besides the point: market power refers to the ability to raise prices above what is truly competitive, which they cert

by chiaro 9y ago

They are leading in the niche, but that's besides the point: market power refers to the ability to raise prices above what is truly competitive, which they certainly have to some extent while not being a monopoly.

jdmichal 9y ago
> ... market power refers to the ability to raise prices above what is truly competitive, which they certainly have to some extent while not being a monopoly. Have they really, though? I mean, a Maserati is also priced very highly. Certainly much higher than what is "truly competitive" for a luxury vehicle. But I don't think anyone would call them a monopoly. Likewise, Tesla is selling a unique product within a class, and some people are willing to pay more for that product. In other words, they have a product with a competitive advantage, and that allows them to price higher than the competition. This is healthy and normal elastic demand. I mean, price was a big reason the Model 3 presold in a week about three times the entire Model S volume.
- chiaro 9y ago
  The typical argument in that favour is that a product comes with certain intangible benefits, be it social signalling or personal actualisation that helps explain why firms with strong brand identity can push higher margins in otherwise competitive markets. This is a partial explanation to the extent that it doesn't play nicely with another prevailing theory that mindshare and niche dominance enables market power through greater information asymmetry. The presence of a larger car market curtails how market power can be exercised, to the extent that your hydrocarbon cars are substitute goods for electric ones. I have no real issue with Tesla from a competitive perspective. I'm simply making two fairly seperate points, that monopolies are always bad, and Tesla has accrued many more benefits from the state than penalties, on account of its size.
maxxxxx 9y ago
They created a little niche in large market but it's pretty easy to avoid them if you don't like their cars.

by chiaro 9y ago

jdmichal 9y ago

> ... market power refers to the ability to raise prices above what is truly competitive, which they certainly have to some extent while not being a monopoly. Have they really, though? I mean, a Maserati is also priced very highly. Certainly much higher than what is "truly competitive" for a luxury vehicle. But I don't think anyone would call them a monopoly. Likewise, Tesla is selling a unique product within a class, and some people are willing to pay more for that product. In other words, they have a product with a competitive advantage, and that allows them to price higher than the competition. This is healthy and normal elastic demand. I mean, price was a big reason the Model 3 presold in a week about three times the entire Model S volume.

chiaro 9y ago
The typical argument in that favour is that a product comes with certain intangible benefits, be it social signalling or personal actualisation that helps explain why firms with strong brand identity can push higher margins in otherwise competitive markets. This is a partial explanation to the extent that it doesn't play nicely with another prevailing theory that mindshare and niche dominance enables market power through greater information asymmetry. The presence of a larger car market curtails how market power can be exercised, to the extent that your hydrocarbon cars are substitute goods for electric ones. I have no real issue with Tesla from a competitive perspective. I'm simply making two fairly seperate points, that monopolies are always bad, and Tesla has accrued many more benefits from the state than penalties, on account of its size.

maxxxxx 9y ago

They created a little niche in large market but it's pretty easy to avoid them if you don't like their cars.