5 ms·
Economist Israel Kirzner insisted that monopoly analysis is only applicable when the possibility of competition is eliminated, either legally or by the producer
by trappist 7y ago
Economist Israel Kirzner insisted that monopoly analysis is only applicable when the possibility of competition is eliminated, either legally or by the producer's sole control of the total supply of a resource necessary for the production of a good or service, and that the term should therefore be defined as such. In which case Amazon is not a monopoly, and we shouldn't be surprised to see continually falling prices and increasing quality.
http://rationalargumentator.com/issue118/Kirzner3.html http://rationalargumentator.com/issue118/Kirzner3.html
- chumali 7y agoThis is an arbitrary definition that few economists would accept. Market concentration exists on a spectrum ranging from perfect competition to full scale monopoly. The determinant is the ease of entry and exit and the extent to which the outcome diverges from utility maximising point. In the case of Amazon there are sufficient barriers to entry that if Amazon were to make profit maximisation its goal, then it could increase prices and enjoy above market returns for a significant period even in spite of the eventual 'possibility' of competition. To suggest that regulators should wait until the market is fully captured before considering a firm a monopoly is patently absurd since by then the efficiency losses would have already been realised and the remedy becomes harder to implement. Also, I urge you to find anyone who agrees that there has been an increase in the quality of products available on Amazon. On the contrary, there are countless stories of people lamenting the decline in product quality.