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I've always wondered that in a theoretical pure market economy where success ultimately leads to domination of one or more competitors, and failure for everyone

I've always wondered that in a theoretical pure market economy where success ultimately leads to domination of one or more competitors, and failure for everyone else, will always result in a more restrictive market economy afterwards. Apple succeeded (and almost died first, I know, I was there at the time) in integrating hardware and software and Google succeeded in building a better search engine and dominating ads, plus buying Android, yet today there are basically no alternatives to iPhones and Android phones, and search is still majorally dominated by Google. Economically speaking, the market economy allowed them to become dominant in their categories. If you throttle competition to avoid mono/duopolies, do you throttle success for everyone? If you clamp down after successful domination, does that really increase competition? Is there a balance somewhere, or is this basically always going to happen?

lotsofpulp 5y ago
> Is there a balance somewhere, or is this basically always going to happen? I do not see any other possible result in a market for products with near zero marginal costs and high barriers to entry.
- ece 5y ago
  If the only barrier to entry was money, that would be understandable, but facing artificial roadblocks like those Tile faced seems pretty avoidable with better anti-trust regulation. I also don't think making software or making a platform is "near zero marginal cost." Sure someone can hack something together with off the shelf components in a short time, but building a sustainable product or service isn't easy and takes a lot of resources. Copycat products or making the nth widget might be things which are low marginal cost, but then those who don't innovate die off.
  - lotsofpulp 5y ago
    The zero marginal cost is for copies of the same software. Whereas physical goods have to continuously deal with suppliers, commodities costs, quality of said suppliers and commodities, efficiencies in manufacturing, etc., there is comparatively near zero of that with software. Once it is made, selling it to 1, 10, or 100 buyers makes no difference which lets you drive the price down in case any competitor should try to come around. As an example, Microsoft bundling Teams with its other software at nearly no cost to Microsoft versus Slack. In a physical product business, a seller does not have as much freedom to bundle in extras at no cost to prevent competitors.
    - ece 5y ago
      This is a meaningless argument, like I said, innovation and upkeep isn't free. Software requires just as much infrastructure, tooling, and optimization as making a physical good. Your code will bit rot in weeks or months if you don't keep up with changes. Nobody is going to want the 100th copy if someone else has added a popular feature that I don't have. Lowering the price to build a user base is one thing, doing it just to get a sale is temporary and can't last. (edit: If I'm making a game I need art, if it's an App that uses ML/AI, I need data, and if it's an OS, I need hardware docs. None of these things are easier or harder to get than say wood or metal.) Those wanting to use something other than Teams are still free to choose, the switching costs are the barrier to entry in this case and anti-trust can ensure it's not made artificially higher by platforms.
ksec 5y ago
>or is this basically always going to happen? High Barrier of Entry is always going to create monopoly. Who wants to invest tens of billions every year just to stay on top of leading edge Node and try to compete with TSMC? Even Global foundry being bankrolled by Saudi couldn't afford it. >do you throttle success for everyone? It isn't about market monopoly, it is about the abuse of its power once you reach that status. It has to be fair and just.

lotsofpulp 5y ago

> Is there a balance somewhere, or is this basically always going to happen? I do not see any other possible result in a market for products with near zero marginal costs and high barriers to entry.

ece 5y ago
If the only barrier to entry was money, that would be understandable, but facing artificial roadblocks like those Tile faced seems pretty avoidable with better anti-trust regulation. I also don't think making software or making a platform is "near zero marginal cost." Sure someone can hack something together with off the shelf components in a short time, but building a sustainable product or service isn't easy and takes a lot of resources. Copycat products or making the nth widget might be things which are low marginal cost, but then those who don't innovate die off.
- lotsofpulp 5y ago
  The zero marginal cost is for copies of the same software. Whereas physical goods have to continuously deal with suppliers, commodities costs, quality of said suppliers and commodities, efficiencies in manufacturing, etc., there is comparatively near zero of that with software. Once it is made, selling it to 1, 10, or 100 buyers makes no difference which lets you drive the price down in case any competitor should try to come around. As an example, Microsoft bundling Teams with its other software at nearly no cost to Microsoft versus Slack. In a physical product business, a seller does not have as much freedom to bundle in extras at no cost to prevent competitors.
  - ece 5y ago
    This is a meaningless argument, like I said, innovation and upkeep isn't free. Software requires just as much infrastructure, tooling, and optimization as making a physical good. Your code will bit rot in weeks or months if you don't keep up with changes. Nobody is going to want the 100th copy if someone else has added a popular feature that I don't have. Lowering the price to build a user base is one thing, doing it just to get a sale is temporary and can't last. (edit: If I'm making a game I need art, if it's an App that uses ML/AI, I need data, and if it's an OS, I need hardware docs. None of these things are easier or harder to get than say wood or metal.) Those wanting to use something other than Teams are still free to choose, the switching costs are the barrier to entry in this case and anti-trust can ensure it's not made artificially higher by platforms.

ksec 5y ago

>or is this basically always going to happen? High Barrier of Entry is always going to create monopoly. Who wants to invest tens of billions every year just to stay on top of leading edge Node and try to compete with TSMC? Even Global foundry being bankrolled by Saudi couldn't afford it. >do you throttle success for everyone? It isn't about market monopoly, it is about the abuse of its power once you reach that status. It has to be fair and just.