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> It's extra clear in a market like air travel. Sure, that is a market with large amounts of geographic network effects. I already said that markets with larg

by stale2002 6y ago

> It's extra clear in a market like air travel. Sure, that is a market with large amounts of geographic network effects. I already said that markets with large network effects could have competition problems. IE, with air travel, on any given route between two cities, there might only be 1 or two airlines servicing it. So yes, thats a problem. Most things that people spend their money on do not have much network effects, so my original point stands. > to such an extent that only 14 car companies control 54 brands So not a winner take all market then? Got it. I already said that it would be ridiculous to claim that a market would need to have 10,000 companies of equal size, in order to be considered "competitive". So yes, I consider the car market to be fairly competitive, and not one where you only have "no choice". > Fridges are another great example. You just posted a link that shows that there are a bunch of competitors, and that it is not a winner take all market. So I stand by my point that neither cars nor fridges are in any way similar to something like internet service, where someone might only have 1 or 2 choices, or something like the Google ads business, where Google has a huge amount of power in the market that is no way comparable to the fairly competitive car market.

arcticbull 6y ago
I posit these markets only have many players because regulation prevents their consolidation. Cars went from 54 to 14 establishing clear directionality and benefit. It's not going from 14 to 1 only because of laws against further consolidation in the space. Regulators would simply deny their request to consolidate further. Stopping at 14 isn't some magical constant or some natural end state. My point is that the natural direction in each of these markets is consolidation, then at a point it hits a dead stop. Why is consolidation only useful up to a certain threshold? It's not. Regulation steps in and keeps it competitive.
- stale2002 6y ago
  > only because of laws against further consolidation in the space No, because these markets don't have some huge geographic network effect. The markets are pretty different than something like home internet service. The traditional example being that of water pipes, where there is zero benefit to laying the pipes twice to a house. You should be able to see how a situation where laying the pipes twice to a house is pretty different than a situation where there absolutely could be benefits to another car company being created, to manufacture new cars. > Regulation steps I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies. Anti-trust law isn't really enforced even in obvious cases where it should be enforced these days , and yet I see a world where there is lots of new companies entering markets, and lots of competition, in most markets, despite regulators failing to enforce regulation in the exceptional and rare cases where it should be doing so. It is quite clear that regulation is not stepping in, even in the obvious cases. So no, I do not believe that the non-existent enforcement of regulation is doing anything. Instead, we are living in a world that has lots of competition, despite the fact that the regulators aren't doing anything even in the blatant and exceptional cases where it should, such as in telecom/internet/app stores/ect.
  - arcticbull 6y ago
    > I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies. As I said, my analysis applies to companies that have demonstrated economies of scale. Mergers are rejected all the time, and further, you can't discount the mergers that weren't requested in the first place because of the regulators. I would say in the US mergers tend to skate through, but in if that company operates in other jurisdictions they need approval from all global regulators, and the EU has no such objections to saying no. You haven't posited a theory at all for why consolidation is good up to 14 players in the automotive space but 13 is just a bridge too far. It's not. There's external pressure. Competition is bad for companies because it reduces margin. Consolidation removes competition and improves margins. That's just fact. Companies don't care about capitalism, competition or free markets. They care about making more money.
    - stale2002 6y ago
      > Mergers are rejected all the time I really would not consider the current situation to be one where regulators are doing strong enforcement of anti-trust law. Regulators are really not doing much regulating right now, on the anti-trust and anti-competition front, and regulators not doing much regulating in these new markets where they definitely should be. I am not sure how you could possibly look at the current state of some of these rare expectations of monopoly behaving companies, and claim that regulators are doing their job. > I would say in the US mergers tend to skate through Well then this concession is good enough to support my point. > You haven't posited a theory at all for why consolidation Well I don't need to. All I have to do is point to the existence of lots of markets that are competitive, and point out that regulators that aren't regulating. The reason doesn't matter as long as I point to the clearly true fact that regulators aren't doing much regulating in some of these markets. But, one possible theory is that consolidation also reduce competition, and can cause companies to stagnate, and can reduce innovation in that market. You would have to argue that no startups ever could succeed in the face of "scale" (something that is clearly not true. Startups suceed all the time), if you are going to argue that scale is such an overwhelming advantage that inevitably causes every single company in that market to join together. Also, different companies run differently, and this can give them advantages in some things, and disadvantages in others, allowing them to overcome scale problems, due to the advantage/disadvantage of merely being different. Heterogeneity in companies allows them to target niches and stay in the market.

arcticbull 6y ago

I posit these markets only have many players because regulation prevents their consolidation. Cars went from 54 to 14 establishing clear directionality and benefit. It's not going from 14 to 1 only because of laws against further consolidation in the space. Regulators would simply deny their request to consolidate further. Stopping at 14 isn't some magical constant or some natural end state. My point is that the natural direction in each of these markets is consolidation, then at a point it hits a dead stop. Why is consolidation only useful up to a certain threshold? It's not. Regulation steps in and keeps it competitive.

stale2002 6y ago
> only because of laws against further consolidation in the space No, because these markets don't have some huge geographic network effect. The markets are pretty different than something like home internet service. The traditional example being that of water pipes, where there is zero benefit to laying the pipes twice to a house. You should be able to see how a situation where laying the pipes twice to a house is pretty different than a situation where there absolutely could be benefits to another car company being created, to manufacture new cars. > Regulation steps I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies. Anti-trust law isn't really enforced even in obvious cases where it should be enforced these days , and yet I see a world where there is lots of new companies entering markets, and lots of competition, in most markets, despite regulators failing to enforce regulation in the exceptional and rare cases where it should be doing so. It is quite clear that regulation is not stepping in, even in the obvious cases. So no, I do not believe that the non-existent enforcement of regulation is doing anything. Instead, we are living in a world that has lots of competition, despite the fact that the regulators aren't doing anything even in the blatant and exceptional cases where it should, such as in telecom/internet/app stores/ect.
- arcticbull 6y ago
  > I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies. As I said, my analysis applies to companies that have demonstrated economies of scale. Mergers are rejected all the time, and further, you can't discount the mergers that weren't requested in the first place because of the regulators. I would say in the US mergers tend to skate through, but in if that company operates in other jurisdictions they need approval from all global regulators, and the EU has no such objections to saying no. You haven't posited a theory at all for why consolidation is good up to 14 players in the automotive space but 13 is just a bridge too far. It's not. There's external pressure. Competition is bad for companies because it reduces margin. Consolidation removes competition and improves margins. That's just fact. Companies don't care about capitalism, competition or free markets. They care about making more money.
  - stale2002 6y ago
    > Mergers are rejected all the time I really would not consider the current situation to be one where regulators are doing strong enforcement of anti-trust law. Regulators are really not doing much regulating right now, on the anti-trust and anti-competition front, and regulators not doing much regulating in these new markets where they definitely should be. I am not sure how you could possibly look at the current state of some of these rare expectations of monopoly behaving companies, and claim that regulators are doing their job. > I would say in the US mergers tend to skate through Well then this concession is good enough to support my point. > You haven't posited a theory at all for why consolidation Well I don't need to. All I have to do is point to the existence of lots of markets that are competitive, and point out that regulators that aren't regulating. The reason doesn't matter as long as I point to the clearly true fact that regulators aren't doing much regulating in some of these markets. But, one possible theory is that consolidation also reduce competition, and can cause companies to stagnate, and can reduce innovation in that market. You would have to argue that no startups ever could succeed in the face of "scale" (something that is clearly not true. Startups suceed all the time), if you are going to argue that scale is such an overwhelming advantage that inevitably causes every single company in that market to join together. Also, different companies run differently, and this can give them advantages in some things, and disadvantages in others, allowing them to overcome scale problems, due to the advantage/disadvantage of merely being different. Heterogeneity in companies allows them to target niches and stay in the market.