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I'm typically a "when in doubt, free markets" type, but the three tier system (production, distribution, and retailing) has numerous advantages. The craft beer

I'm typically a "when in doubt, free markets" type, but the three tier system (production, distribution, and retailing) has numerous advantages. The craft beer boom, for example, would never have happened in the absence of a legally-mandated 3 tier system. Not only did this result in greater consumer choice, but it also allowed small businesses to thrive in a sector where there are significant economies of scale. I think similar benefits would be realized in the art world, with similar exceptions for very small studios that usually don't have access to the same distribution channels.

zajd 7y ago
There is no such thing as a free market. The sooner Americans accept this maybe we can move forward towards a society where we don't allow businesses to engage in predatory practices under the guise of "free market ideology". Like Uber/Lyft price dumping for the past decade. We're ruining the taxi industry for what exactly? So a bunch of millionaires can lose money for 20 years because they are selling billionaires on the idea of having a monopoly.
- magduf 7y ago
  They "ruined" the taxi industry because it was anti-consumer and absolutely horrible. That's why it was so easy for them to "ruin" it (read: make it so much better). Seriously, you think it's "ruining" an industry to have a convenient smartphone app instead of having to call someone on a phone and hope a driver shows up within 2 hours? And then have a driver that doesn't use a taximeter, drives around in circles, and just makes up a price on the spot? Maybe you never tried using cabs in the suburbs before the invention of Uber/Lyft.
- Mountain_Skies 7y ago
  The taxi industry ruined itself long before anyone conceived of Uber or Lyft. There was nothing stopping the taxi industry from creating Uber. They had the regulatory capture to make it happen much easier than how Uber and Lyft built themselves. Even without Uber or Lyft the taxi industry was busy pushing their customers into purchasing private automobiles because taxi service was so awful.
pfranz 7y ago
> The craft beer boom, for example, would never have happened in the absence of a legally-mandated 3 tier system. Really? I'm not intimately familiar with it, but I've heard the exact opposite. Big distributors are already partnered with the big guys, so small guys had a lot of trouble getting distribution and couldn't do it themselves. There are also silly restrictions. I toured the Budweiser factory in St Louis, got a sample right out of the finishing tanks. We walked 30ft to their Hospitality room where they offered more free drinks, except those were weeks old because they had to go offsite to a distribution center. I'm not saying the 3 tier system is bad or needs to be abolished, just that I find it odd that it facilitated craft beer. I do think it (and the low shelf life of beer) has kept craft beer regional--which is something I personally like when traveling.
- delinka 7y ago
  I feel like you contradict yourself. You point out that "Big distributors are already partnered with the big guys, so small guys had a lot of trouble getting distribution and couldn't do it themselves." Right, the legally mandated change solved this problem for the little guys.
  - pfranz 7y ago
    I'm not following you but maybe I wasn't clear. Yes, producers and distributors are separate, but distributor's main clients are the few large producers. Small guys have trouble getting distribution either because it's not worth the time of the distributors or the large producers strong-arm the distributors. If producers could distribute, they'd just drop their product off at the bar/store themselves.
0815test 7y ago
> "when in doubt, free markets" Monopolies are antithetical to the free market, and vertical integration in industries with high economies of scale does create substantial monopoly concerns! The best market-based solution, so far as we can tell, is precisely to carve out the monopoly-prone "tier" in the industry (this is not always easy as monopoly-potential is not always correctly judged; it's more about inherent lack of contestability creating a sort of undue "power" over the rest of the market, and not so much merely a high market share by any single actor) and require it to act as an open platform to the rest of the market, perhaps even nationalizing it if necessary (this is, after all, the basic rstionale for why many public services are provided by the government). So the regulators in the beer industry may have come out with something quite close to the best known approach, if perhaps not for the same reasons.
- AnthonyMouse 7y ago
  > even nationalizing it if necessary (this is, after all, the basic rstionale for why many public services are provided by the government) Note that those public services generally aren't nationalized. The local water utility is typically operated by the city, not the feds.
  - dredmorbius 7y ago
    s/nationalised/deprivatised/ Or, you know, socialised.
    - AnthonyMouse 7y ago
      There's a pretty big difference between the local town and the entire nation. If a municipal gas company provides poor service in your town, a mayor who doesn't address it is going to have trouble in the next election. If a nationalized gas company provides poor service in your town, good luck making that the issue a US presidential election turns on. And socialized isn't really right either. There is a significant difference between e.g. "socialized medicine" meaning taxpayer-funded healthcare vs. municipal utilities that you pay for as a customer thereby covering the service cost, and may not even require you to patronize them if you don't want service, even if they happen to be operated by the government. I wish they would actually formalize the latter arrangement as something that anyone could set up on their own, i.e. something similar to a 501(c)(3) nonprofit which is established to provide a subscription service and whose directors are required to be elected by the long-term subscribers. Then you might operate an ISP that way, but also potentially things like news reporting and software development.
pfranz 7y ago
> the three tier system (production, distribution, and retailing) has numerous advantages Do you see cable tv as a successful implementation of this? Every few years I'll see news articles and billboards about "Fox couldn't negotiate a deal with Dish." It'll be unavailable for a few weeks until they reach a deal, but in the meantime both sides blame each other and the customer goes without. Not to mention cable adding commercials after charging a monthly fee and constantly increasing their prices. There's also the complaint about only watching 2-3 things--I only ever watched small a handful of channels (I don't hear similar complaints about Netflix). I can see people arguing that's the system working, or it's failing due to oligopolies, or the practical friction of changing cable services is just different than buying a DVD from Target.
- addicted 7y ago
  For all the complaints about cable, what we are transitioning into is significantly worse, with a bunch of different concentrated streaming services. The Fox-Dish battles were basically what helped keep prices lower for viewers. Right now, customers have no big player on their side, so essentially the only way to fight Netflix price increases is on a purely individual level, which rarely works. Dish would concentrate the power of its many subscribers.
  - delinka 7y ago
    People have clamored for a la carte pricing for a long time. Well, the direction we're headed is a response to that, albeit not a good response from the view of consumers. We'll have to start managing which services we pay for - subscribe, binge, unsubscribe, move to the next service, repeat. The smaller players will sell out to the bigger players. The bigger players will gain additional leverage against content providers. This is the market functioning. What amazes me every time I think about this is the ever-present short-term thinking by these companies: gain subscribers now, take as much money as we can now, and the downside will be dealt with by the next generation of executives in three years. While consumers' economy is affected negatively almost immediately and for the long term.
    - 7y ago

zajd 7y ago

There is no such thing as a free market. The sooner Americans accept this maybe we can move forward towards a society where we don't allow businesses to engage in predatory practices under the guise of "free market ideology". Like Uber/Lyft price dumping for the past decade. We're ruining the taxi industry for what exactly? So a bunch of millionaires can lose money for 20 years because they are selling billionaires on the idea of having a monopoly.

magduf 7y ago
They "ruined" the taxi industry because it was anti-consumer and absolutely horrible. That's why it was so easy for them to "ruin" it (read: make it so much better). Seriously, you think it's "ruining" an industry to have a convenient smartphone app instead of having to call someone on a phone and hope a driver shows up within 2 hours? And then have a driver that doesn't use a taximeter, drives around in circles, and just makes up a price on the spot? Maybe you never tried using cabs in the suburbs before the invention of Uber/Lyft.
Mountain_Skies 7y ago
The taxi industry ruined itself long before anyone conceived of Uber or Lyft. There was nothing stopping the taxi industry from creating Uber. They had the regulatory capture to make it happen much easier than how Uber and Lyft built themselves. Even without Uber or Lyft the taxi industry was busy pushing their customers into purchasing private automobiles because taxi service was so awful.

pfranz 7y ago

> The craft beer boom, for example, would never have happened in the absence of a legally-mandated 3 tier system. Really? I'm not intimately familiar with it, but I've heard the exact opposite. Big distributors are already partnered with the big guys, so small guys had a lot of trouble getting distribution and couldn't do it themselves. There are also silly restrictions. I toured the Budweiser factory in St Louis, got a sample right out of the finishing tanks. We walked 30ft to their Hospitality room where they offered more free drinks, except those were weeks old because they had to go offsite to a distribution center. I'm not saying the 3 tier system is bad or needs to be abolished, just that I find it odd that it facilitated craft beer. I do think it (and the low shelf life of beer) has kept craft beer regional--which is something I personally like when traveling.

delinka 7y ago
I feel like you contradict yourself. You point out that "Big distributors are already partnered with the big guys, so small guys had a lot of trouble getting distribution and couldn't do it themselves." Right, the legally mandated change solved this problem for the little guys.
- pfranz 7y ago
  I'm not following you but maybe I wasn't clear. Yes, producers and distributors are separate, but distributor's main clients are the few large producers. Small guys have trouble getting distribution either because it's not worth the time of the distributors or the large producers strong-arm the distributors. If producers could distribute, they'd just drop their product off at the bar/store themselves.

0815test 7y ago

> "when in doubt, free markets" Monopolies are antithetical to the free market, and vertical integration in industries with high economies of scale does create substantial monopoly concerns! The best market-based solution, so far as we can tell, is precisely to carve out the monopoly-prone "tier" in the industry (this is not always easy as monopoly-potential is not always correctly judged; it's more about inherent lack of contestability creating a sort of undue "power" over the rest of the market, and not so much merely a high market share by any single actor) and require it to act as an open platform to the rest of the market, perhaps even nationalizing it if necessary (this is, after all, the basic rstionale for why many public services are provided by the government). So the regulators in the beer industry may have come out with something quite close to the best known approach, if perhaps not for the same reasons.

AnthonyMouse 7y ago
> even nationalizing it if necessary (this is, after all, the basic rstionale for why many public services are provided by the government) Note that those public services generally aren't nationalized. The local water utility is typically operated by the city, not the feds.
- dredmorbius 7y ago
  s/nationalised/deprivatised/ Or, you know, socialised.
  - AnthonyMouse 7y ago
    There's a pretty big difference between the local town and the entire nation. If a municipal gas company provides poor service in your town, a mayor who doesn't address it is going to have trouble in the next election. If a nationalized gas company provides poor service in your town, good luck making that the issue a US presidential election turns on. And socialized isn't really right either. There is a significant difference between e.g. "socialized medicine" meaning taxpayer-funded healthcare vs. municipal utilities that you pay for as a customer thereby covering the service cost, and may not even require you to patronize them if you don't want service, even if they happen to be operated by the government. I wish they would actually formalize the latter arrangement as something that anyone could set up on their own, i.e. something similar to a 501(c)(3) nonprofit which is established to provide a subscription service and whose directors are required to be elected by the long-term subscribers. Then you might operate an ISP that way, but also potentially things like news reporting and software development.

pfranz 7y ago

> the three tier system (production, distribution, and retailing) has numerous advantages Do you see cable tv as a successful implementation of this? Every few years I'll see news articles and billboards about "Fox couldn't negotiate a deal with Dish." It'll be unavailable for a few weeks until they reach a deal, but in the meantime both sides blame each other and the customer goes without. Not to mention cable adding commercials after charging a monthly fee and constantly increasing their prices. There's also the complaint about only watching 2-3 things--I only ever watched small a handful of channels (I don't hear similar complaints about Netflix). I can see people arguing that's the system working, or it's failing due to oligopolies, or the practical friction of changing cable services is just different than buying a DVD from Target.

addicted 7y ago
For all the complaints about cable, what we are transitioning into is significantly worse, with a bunch of different concentrated streaming services. The Fox-Dish battles were basically what helped keep prices lower for viewers. Right now, customers have no big player on their side, so essentially the only way to fight Netflix price increases is on a purely individual level, which rarely works. Dish would concentrate the power of its many subscribers.
- delinka 7y ago
  People have clamored for a la carte pricing for a long time. Well, the direction we're headed is a response to that, albeit not a good response from the view of consumers. We'll have to start managing which services we pay for - subscribe, binge, unsubscribe, move to the next service, repeat. The smaller players will sell out to the bigger players. The bigger players will gain additional leverage against content providers. This is the market functioning. What amazes me every time I think about this is the ever-present short-term thinking by these companies: gain subscribers now, take as much money as we can now, and the downside will be dealt with by the next generation of executives in three years. While consumers' economy is affected negatively almost immediately and for the long term.
  - 7y ago