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This is not an uncommon argument. It's not that the free market never leads to monopolies - but almost all of the most recognizable monopolies either owe their

This is not an uncommon argument. It's not that the free market never leads to monopolies - but almost all of the most recognizable monopolies either owe their business model to a distortion in the market directly caused by regulation, owe their continued long-term existence to a regulatory environment that makes it unusually hard for would-be competitors to even think about trying to fight them, or owe their particular reach and dominance to special advantages imposed from outside. Monopolies, oligopolies, and cartels can (and would) certainly occur even in the mythical Ancapistan, but accidental and deliberate abuses of state power make them both more common, more stable, and worse than they would be otherwise.

Retric 8y ago
Historically monopoly’s show up in many market which seems like a strong counter argument. Companies like Intel have intentionally avoided becoming a full monopoly due to regulations, but economies of scale end up being a huge advantage. Walmart needs no help to kill off competition in a small town as a more local example.
- AnthonyMouse 8y ago
  But notice how Walmart's "monopoly" is different from Comcast's. Comcast has a monopoly because barriers are high. Walmart has one because they're the fiercest competitor. If Walmart raised prices, competing stores would appear immediately. When Comcast raises prices, everyone else has to tighten their belt.
  - Retric 8y ago
    Companies can’t start up and fail for zero cost. Which allows Walmart to raise prices without instantly getting competition in those areas. In higher population areas that can support more stores it’s a very different story.
    - hackeraccount 8y ago
      Have you ever been to a Walmart where the prices are high?
      - johncalvinyoung 8y ago
        Walmart prices do vary. In some places grocery competitors like Aldi do shade many of their prices significantly (and consistently, not just loss leaders).
        AnthonyMouse 8y ago
        Prices in different stores vary for a lot of reasons. One area will have higher real estate costs or higher taxes, or a lower volume of customers to amortize fixed costs over. This is also why a new competitor opening up seems to cause prices to decline significantly. Part of it is the competition, but part of it is that the same factors that allowed the competitor to justify opening a new store (e.g. a tax cut or population growth) also allow the existing store to reduce prices.
    - AnthonyMouse 8y ago
      > Companies can’t start up and fail for zero cost. Retailing companies? Sure they can. If Walmart started selling products for $5 that retail for $1 elsewhere, anyone could sell the ten they already have in their kitchen to their neighbors for $4.50 each, then use the money they just made to drive to the next town and buy twice as many. Before they've even run out of vacation days at their real job they're doing half the business in the town and can afford to rent a storefront month to month and hire some college students to mind the store. The second Walmart lowers their prices again, they sell their remaining inventory for the normal retail price instead of the inflated one and then shut down. Assuming they haven't built enough volume and loyalty in the local market by then to continue operating and keep half the town's business indefinitely.
      - Retric 8y ago
        In a ~3% margin business the difference between 1$ and 1.05$ is huge. But, nobody is going to be selling canned tuna out of their basement for under 10 cents profit on the can. Which is the real power of monopoly pricing, it's not obvious that spending 1.05$ is vastly worse than 1$ but it makes a huge difference to a companies bottom line.

Retric 8y ago

Historically monopoly’s show up in many market which seems like a strong counter argument. Companies like Intel have intentionally avoided becoming a full monopoly due to regulations, but economies of scale end up being a huge advantage. Walmart needs no help to kill off competition in a small town as a more local example.

AnthonyMouse 8y ago
But notice how Walmart's "monopoly" is different from Comcast's. Comcast has a monopoly because barriers are high. Walmart has one because they're the fiercest competitor. If Walmart raised prices, competing stores would appear immediately. When Comcast raises prices, everyone else has to tighten their belt.
- Retric 8y ago
  Companies can’t start up and fail for zero cost. Which allows Walmart to raise prices without instantly getting competition in those areas. In higher population areas that can support more stores it’s a very different story.
  - hackeraccount 8y ago
    Have you ever been to a Walmart where the prices are high?
    - johncalvinyoung 8y ago
      Walmart prices do vary. In some places grocery competitors like Aldi do shade many of their prices significantly (and consistently, not just loss leaders).
      - AnthonyMouse 8y ago
        Prices in different stores vary for a lot of reasons. One area will have higher real estate costs or higher taxes, or a lower volume of customers to amortize fixed costs over. This is also why a new competitor opening up seems to cause prices to decline significantly. Part of it is the competition, but part of it is that the same factors that allowed the competitor to justify opening a new store (e.g. a tax cut or population growth) also allow the existing store to reduce prices.
  - AnthonyMouse 8y ago
    > Companies can’t start up and fail for zero cost. Retailing companies? Sure they can. If Walmart started selling products for $5 that retail for $1 elsewhere, anyone could sell the ten they already have in their kitchen to their neighbors for $4.50 each, then use the money they just made to drive to the next town and buy twice as many. Before they've even run out of vacation days at their real job they're doing half the business in the town and can afford to rent a storefront month to month and hire some college students to mind the store. The second Walmart lowers their prices again, they sell their remaining inventory for the normal retail price instead of the inflated one and then shut down. Assuming they haven't built enough volume and loyalty in the local market by then to continue operating and keep half the town's business indefinitely.
    - Retric 8y ago
      In a ~3% margin business the difference between 1$ and 1.05$ is huge. But, nobody is going to be selling canned tuna out of their basement for under 10 cents profit on the can. Which is the real power of monopoly pricing, it's not obvious that spending 1.05$ is vastly worse than 1$ but it makes a huge difference to a companies bottom line.