5 ms·

Should the government prop up 10 competitors in every industry? Is there a geographical threshold? If there is one plumber in a small town should the government

by cglace 7y ago

Should the government prop up 10 competitors in every industry? Is there a geographical threshold? If there is one plumber in a small town should the government prop up more or punish the one guy who wants to serve that market? Does market size matter? What if I discovered a super niche market that no one serves should we assume this market needs 10-100 competitors? Off the top of my head I have 100s of other questions and problems with your idea. I think picking a constant number to apply throughout the entire economy is going to be fraught with edge cases.

TheOtherHobbes 7y ago
The government doesn't need to "prop up" competitors. It just needs to prevent mergers and takeovers that limit the number of market players to an unworkably small number. Yes, market size matters and the problem only really applies to companies who provide strategic infrastructure and services and are large enough to dictate terms to government, to customers, and to competitors, in ways that distort and limit their market freedoms. None of this is mysterious or hard to understand, and it's been the foundation of antitrust legislation since Standard Oil.
- ksdale 7y ago
  That's easier said than done. Often times, refusing to allow a merger will mean that one of the competitors will just go out of business, and avoiding that will require propping up a competitor.
  - Swenrekcah 7y ago
    Then go out of business they must.
    - greedo 7y ago
      The result of that is a merger on the cheap. The surviving companies get to acquire talent, patents, trade secrets at a far cheaper rate. This would essentially kill off any company's chance of merging if it wasn't relatively healthy.
    - ksdale 7y ago
      Right, I was just responding to the parent's assertion that preventing a monopoly doesn't require propping up competitors. Sometimes it does require that, and we should be conscious of the trade off we'd make in that situation.
- PaulHoule 7y ago
  In the 1960s you had several passenger airline companies based in the U.S. such as Boeing, Lockheed, and McDonald Douglas. Europeans got seriously spooked because they were afraid that if Italian Airlines flew Italian planes and such, fragmented markets would prevent any European company from being a viable player in the long term. So they collaborated on the Concorde, and then the Airbus A300, consolidating the European aerospace industry quite successfully. It costs a lot of money to train a pilot to fly a new aircraft, and on top of that you have mechanics, ground handlers, air traffic controllers and many other skilled people whose operations revolve it. Thus there is some public and industry benefit to consolidation, but at the moment the competitive landscape looks very different for widebody (B787, A350) airliners where new technology is making it to to the public as opposed to narrowbody (B737, A320) airliners where the youngest design is 35 years old. (Some of that parallels the lack of competition in the U.S. airline market which is dominated by narrowbody airliners as opposed to international flights on which you are likely to ride on a widebody. If you're going to compress people in all three axes to get them in a 737, why bother thanking them for flying with you?)
- cglace 7y ago
  Antitrust legislation used to block mergers of companies that were 1000x smaller than standard oil and controlled a much smaller share of the market. How antitrust is interpreted and enforced is very much a moving target.
  - Nasrudith 7y ago
    I wonder how much of that was locality vs shifting standards. I recall antitrust receiving a defacto softening of standards by going from business impact to consumer impact (there are some things to debate there since effectively any merger which makes them more competitive would technically count some). Essentially locality means Exxon and Mobil can merge but not the only two gas stations in town. Speaking of which I remember a few gas station chain mergers resulting in closing of gas stations at an intersection not because they were redundant but laws against the same owner having separate gas stations within a certain distance.
- nickik 7y ago
  You historical knowlage is just wrong here. In fact the 'foundation' of anti-trust has changed a lot since Standard Oil and the Progressive 'Trust Busters'. We have since realized that Anti-Trust in the Progressive period basically was applied with very little oversight and it was not applied consistantly. It was basically a way for politicans to go after the competition of their funders. This part of Anti-Trust history is often ignored in the glorifited 'Progessives fight evil capitalists'-story that is now so popular with the modern progressives. Under the new rules, that the judges (specifically Richard Posner) came up with you actually have to show consumers were harmed. And since then all Anti-Trust cases are judged according to that criteria. And unsurprisingly the amount of Anti-Trust conviction has gone to basically nothing. Standard Oil being case and point, during Standard Oil the oil price consistantly went down and the quality improved. The people that ran amoke against it were not in fact the poor consumers but rather local oil companies that were getting their ass handed to them by Standard Oil. They simply could not compete with the price or the quality.
ncallaway 7y ago
> Should the government prop up 10 competitors in every industry? This questions seems answered by the comment it's replying to. The previous poster said: > There's nothing necessarily wrong with a segment where there's essentially one one or two providers; some things may be natural monopolies. So, that seems like an answer to your question: no. There are some segments where it doesn't make sense.
deleted 7y ago
[deleted]

by cglace 7y ago

TheOtherHobbes 7y ago

The government doesn't need to "prop up" competitors. It just needs to prevent mergers and takeovers that limit the number of market players to an unworkably small number. Yes, market size matters and the problem only really applies to companies who provide strategic infrastructure and services and are large enough to dictate terms to government, to customers, and to competitors, in ways that distort and limit their market freedoms. None of this is mysterious or hard to understand, and it's been the foundation of antitrust legislation since Standard Oil.

ksdale 7y ago
That's easier said than done. Often times, refusing to allow a merger will mean that one of the competitors will just go out of business, and avoiding that will require propping up a competitor.
- Swenrekcah 7y ago
  Then go out of business they must.
  - greedo 7y ago
    The result of that is a merger on the cheap. The surviving companies get to acquire talent, patents, trade secrets at a far cheaper rate. This would essentially kill off any company's chance of merging if it wasn't relatively healthy.
  - ksdale 7y ago
    Right, I was just responding to the parent's assertion that preventing a monopoly doesn't require propping up competitors. Sometimes it does require that, and we should be conscious of the trade off we'd make in that situation.
PaulHoule 7y ago
In the 1960s you had several passenger airline companies based in the U.S. such as Boeing, Lockheed, and McDonald Douglas. Europeans got seriously spooked because they were afraid that if Italian Airlines flew Italian planes and such, fragmented markets would prevent any European company from being a viable player in the long term. So they collaborated on the Concorde, and then the Airbus A300, consolidating the European aerospace industry quite successfully. It costs a lot of money to train a pilot to fly a new aircraft, and on top of that you have mechanics, ground handlers, air traffic controllers and many other skilled people whose operations revolve it. Thus there is some public and industry benefit to consolidation, but at the moment the competitive landscape looks very different for widebody (B787, A350) airliners where new technology is making it to to the public as opposed to narrowbody (B737, A320) airliners where the youngest design is 35 years old. (Some of that parallels the lack of competition in the U.S. airline market which is dominated by narrowbody airliners as opposed to international flights on which you are likely to ride on a widebody. If you're going to compress people in all three axes to get them in a 737, why bother thanking them for flying with you?)
cglace 7y ago
Antitrust legislation used to block mergers of companies that were 1000x smaller than standard oil and controlled a much smaller share of the market. How antitrust is interpreted and enforced is very much a moving target.
- Nasrudith 7y ago
  I wonder how much of that was locality vs shifting standards. I recall antitrust receiving a defacto softening of standards by going from business impact to consumer impact (there are some things to debate there since effectively any merger which makes them more competitive would technically count some). Essentially locality means Exxon and Mobil can merge but not the only two gas stations in town. Speaking of which I remember a few gas station chain mergers resulting in closing of gas stations at an intersection not because they were redundant but laws against the same owner having separate gas stations within a certain distance.
nickik 7y ago
You historical knowlage is just wrong here. In fact the 'foundation' of anti-trust has changed a lot since Standard Oil and the Progressive 'Trust Busters'. We have since realized that Anti-Trust in the Progressive period basically was applied with very little oversight and it was not applied consistantly. It was basically a way for politicans to go after the competition of their funders. This part of Anti-Trust history is often ignored in the glorifited 'Progessives fight evil capitalists'-story that is now so popular with the modern progressives. Under the new rules, that the judges (specifically Richard Posner) came up with you actually have to show consumers were harmed. And since then all Anti-Trust cases are judged according to that criteria. And unsurprisingly the amount of Anti-Trust conviction has gone to basically nothing. Standard Oil being case and point, during Standard Oil the oil price consistantly went down and the quality improved. The people that ran amoke against it were not in fact the poor consumers but rather local oil companies that were getting their ass handed to them by Standard Oil. They simply could not compete with the price or the quality.

ncallaway 7y ago

> Should the government prop up 10 competitors in every industry? This questions seems answered by the comment it's replying to. The previous poster said: > There's nothing necessarily wrong with a segment where there's essentially one one or two providers; some things may be natural monopolies. So, that seems like an answer to your question: no. There are some segments where it doesn't make sense.

deleted 7y ago

[deleted]