4 ms·
If the advertising competition you mention didn't exist, for example competitors closing shop and not playing the zero sum game, then you'd have a monopoly comp
by overlords 8y ago
If the advertising competition you mention didn't exist, for example competitors closing shop and not playing the zero sum game, then you'd have a monopoly company, which would also be bad.
So in that case, it's good to play the zero sum game since it's a redistribution of income.
Of course, it's wasted labour, and so what you really want is for the government to step in and extract more in taxes and simply hand over the money as welfare or invest in more fruitful pursuits such as scientific research, rather than redistribution of income coming from zero sum games.
- RealityVoid 8y agoI fail to see why not having advertisement would lead to monopolies.
- overlords 8y agoBurger King stops advertising on Tv and loses even more market share to McDonalds. McDonalds then spends less on advertising because it realizes it doesn't need to because Burger Kind gave up. You're left with a "monopoly", McDonalds whose shareholders/top management make even more money, rather than it being redistributed to employees of Burger King.
- Firadeoclus 8y agoThe premise was not having ads at all, not one company giving up on ads.
- TeMPOraL 8y agoThat's why such change needs to be enforced simultaneously and externally. As an example, I recall reading that tobacco companies were actually very happy about regulations limiting the marketing of tobacco products - by themselves, those regulations didn't change anything about their market share (the market was already saturated), but everyone got to stop spending so much on advertising.
- davidivadavid 8y agoOh I'm sure Marlboro, who spent decades building a brand, wouldn't really care about newcomers not being able to advertise. That makes sense.
- TeMPOraL 8y agoI don't think Marlboro cared about newcomers, a big company can usually buy out the small one if it gets dangerous. Consumers usually don't even notice. Unrestricted advertising is basically Red Queen's race; capping it levels the playing field, so it's better for newcomers as well.
- davidivadavid 8y agoThey especially don't care when they have no chance of growing to a level where they can get dangerous (because they can't advertise).
- logifail 8y agoHow much evidence* is there that "stopping advertising [on TV]" necessarily causes a loss of market share? * specifically evidence not funded by the ad industry
- foobarchu 8y agoFeels like a chicken and egg problem. McDonalds would only have that dominance thanks to years of advertising. If the mass advertising game never existed, those companies would have to have grown through their own merits instead of advertising dollars, and BK might have a chance (opinions of their food nonwithstanding). I think that's what the person meant by "but they can't [agree not to advertise]", because now we're at a point where removing advertising from the equation would favor those who have already advertised the most.
- TeMPOraL 8y ago> I think that's what the person meant by "but they can't [agree not to advertise]", because now we're at a point where removing advertising from the equation would favor those who have already advertised the most. That's not what I meant. What I meant is that neither BK nor McD can risk cutting advertising efforts, because if either one does, the other automatically starts winning market share. They can't agree to it together, because the first party to defect from the agreement will win (not to mention a third party could swoop in and (excuse the pun) eat their lunch). This is a prisoner's dilemma situation, and as we all know, the optimal solution for prisoner's dilemma is to have a mob boss proclaim that he'll kill any prisoner that rats others out to authorities. Similarly, either there's a way to punish defectors, or McD and BK will forever be stuck in the loop of ever growing advertising expenses. Removing advertising would definitely benefit both BK and McD, as both could be able to stop spending money on advertising just to protect their market share.
- TeMPOraL 8y agoI'm not saying the competition shouldn't exist - just that we should put brakes on some of the negative-sum games it causes, once the market is saturated and things turn into a fight for a fixed pie. As you say, at this point it's all wasted labour, and it can eat pretty much all your profits. I tried to refrain from mentioning government regulation here, but the brakes need to be put on everyone simultaneously - deciding to just stop all advertising expense for yourself is a competitive suicide.
- lovich 8y agoI get what you're saying, but I wanted to point out that lower profits can be better for society if due to competition. Every dollar a company earns in profit is a little more of efficiency that could be eked out of the business
- TeMPOraL 8y agoI think we need to be cautious here, though. A perfect market would bring perfect efficiency, but perfect efficiency is a disaster for humans who depend on the market to live. Happiness and quality of life today happen in places where market is not efficient yet.
- acomar 8y agoTo live in a world where markets can be perfectly efficient and everyone happy because we stop staking the lives of people to their worth as determined by the market.