5 ms·

the easiest way to conceptualize monopoly is "the power to limit the possibilities and decisions of other companies" (other than via transparent buy/sell decisi

the easiest way to conceptualize monopoly is "the power to limit the possibilities and decisions of other companies" (other than via transparent buy/sell decisions in the marketplace of course). the size of a company relative to some industry is an indicator of monopoly power, but not a necessary nor sufficient condition of it. the idealization that markets only care about price signals (and particularly tries to ignore political concerns) doesn't represent any real market. antitrust (and similar laws) try to reconcile this discrepancy so that markets can function more closely to their idealized form in inherently political environments.

kortilla 7y ago
> the power to limit the possibilities and decisions of other companies This is a very naive view of the world. In many non-consumer industries, companies limit the possibilities and decisions of other companies via contracts as a matter of business every day.
- clairity 7y ago
  that's not even clever. not every contract is intended to exert monopoly power, but contracts can be and are often used to enforce monopoly power.
  - solveit 7y ago
    Then your helpful conceptualisation isn't so helpful unless you already know what a monopoly is.
    - clairity 7y ago
      nothing helps if you make simple logic errors.
      - kortilla 7y ago
        There are no simple logic errors. Your explanation is a joke based on the world view good companies exist in a vacuum and are incapable of influencing other companies. Look into an industry like smelting for ore. There usually aren’t monopolies but the few that exist are so far apart that the switching costs to a competitor are really painful. This gives them the ability to influence decisions. Here’s another one. A mine needs nash and the only reasonable price is when buying it from a supplier only 300 miles away with a direct rail connection vs trucking from 800 miles away. Buying from the 800 mile supplier causes shipping costs so large the mine might lose profitability. This does not make the nash supplier a monopoly despite its incredibly strong negotiating position that it can use to get the mine to agree to long-term volume lock-ins, exclusivity agreements, etc. Again, by your definition, tons of businesses would be considered monopolies that no economist would because it makes the meaning useless.
        simonh 7y ago
        Interesting examples. Monopolies are usually considered to exist with respect to a particular market. It doesn’t have to be a global monopoly to count, particularly with respect to a particular regulating authority. For example Amazon’s share of the Chinese book market is of no concern to the US regulators. But similarly Amazon might have a monopoly in certain types of books and not others. In your example of the mine, a regulator would have to consider the degree to which the mine and it’s supplier are or aren’t integrated into the overall market. It’s not a one size fits all question. The free marketeer answer is to this their hands up in the face of such complexity and say let the market decide. But then it’s back to cartels and sub standard goods. The balanced approach is messy though and there are difficult edge cases, but someone has to bite the bullet, IMHO.
        kortilla 7y ago
        But what is a regulator to do in that situation? Dictate prices for the seller to keep the mine open? Who does that really help if it’s preventing the nash dealer from selling it someone who is willing to pay more for it? This suddenly puts the regulator in position of keeping the mine open under the auspices of a central planning committee, which is not an easy position to defend. Both the mine and the nash seller are operating in global markets. But this is an industry (like most heavy industry) where location and transportation connectivity can make or break a deal due to the volumes being talked about.
      - dang 7y ago
        Please don't do flamewars on Hacker News. We don't want those here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - kortilla 7y ago
    Nice way to backpedal btw. You layout a definition for monopoly based on a company’s ability to influence decisions of others. Then I point out trivially how companies influence the decisions of others via contracts every day and you retort that it doesn’t count if they aren’t trying to exert their power. So companies that force buyers into contracts that influence decisions meet your definition of being monopolies but you say they don’t count as monopolies because they aren’t trying to exert their power. Kinda a useless definition. Every customer company in low customer count businesses has the power to influence the decisions of the seller. Jack of all trades, master of none. Try again.
    - dang 7y ago
      Please don't do flamewars on Hacker News. We don't want those here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

kortilla 7y ago

> the power to limit the possibilities and decisions of other companies This is a very naive view of the world. In many non-consumer industries, companies limit the possibilities and decisions of other companies via contracts as a matter of business every day.

clairity 7y ago
that's not even clever. not every contract is intended to exert monopoly power, but contracts can be and are often used to enforce monopoly power.
- solveit 7y ago
  Then your helpful conceptualisation isn't so helpful unless you already know what a monopoly is.
  - clairity 7y ago
    nothing helps if you make simple logic errors.
    - kortilla 7y ago
      There are no simple logic errors. Your explanation is a joke based on the world view good companies exist in a vacuum and are incapable of influencing other companies. Look into an industry like smelting for ore. There usually aren’t monopolies but the few that exist are so far apart that the switching costs to a competitor are really painful. This gives them the ability to influence decisions. Here’s another one. A mine needs nash and the only reasonable price is when buying it from a supplier only 300 miles away with a direct rail connection vs trucking from 800 miles away. Buying from the 800 mile supplier causes shipping costs so large the mine might lose profitability. This does not make the nash supplier a monopoly despite its incredibly strong negotiating position that it can use to get the mine to agree to long-term volume lock-ins, exclusivity agreements, etc. Again, by your definition, tons of businesses would be considered monopolies that no economist would because it makes the meaning useless.
      - simonh 7y ago
        Interesting examples. Monopolies are usually considered to exist with respect to a particular market. It doesn’t have to be a global monopoly to count, particularly with respect to a particular regulating authority. For example Amazon’s share of the Chinese book market is of no concern to the US regulators. But similarly Amazon might have a monopoly in certain types of books and not others. In your example of the mine, a regulator would have to consider the degree to which the mine and it’s supplier are or aren’t integrated into the overall market. It’s not a one size fits all question. The free marketeer answer is to this their hands up in the face of such complexity and say let the market decide. But then it’s back to cartels and sub standard goods. The balanced approach is messy though and there are difficult edge cases, but someone has to bite the bullet, IMHO.
        kortilla 7y ago
        But what is a regulator to do in that situation? Dictate prices for the seller to keep the mine open? Who does that really help if it’s preventing the nash dealer from selling it someone who is willing to pay more for it? This suddenly puts the regulator in position of keeping the mine open under the auspices of a central planning committee, which is not an easy position to defend. Both the mine and the nash seller are operating in global markets. But this is an industry (like most heavy industry) where location and transportation connectivity can make or break a deal due to the volumes being talked about.
    - dang 7y ago
      Please don't do flamewars on Hacker News. We don't want those here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- kortilla 7y ago
  Nice way to backpedal btw. You layout a definition for monopoly based on a company’s ability to influence decisions of others. Then I point out trivially how companies influence the decisions of others via contracts every day and you retort that it doesn’t count if they aren’t trying to exert their power. So companies that force buyers into contracts that influence decisions meet your definition of being monopolies but you say they don’t count as monopolies because they aren’t trying to exert their power. Kinda a useless definition. Every customer company in low customer count businesses has the power to influence the decisions of the seller. Jack of all trades, master of none. Try again.
  - dang 7y ago
    Please don't do flamewars on Hacker News. We don't want those here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html