4 ms·

I wonder if mom and pop shops were not as economical. I study consumer prices and I've found mom and pop shops are significantly more expensive than the big ch

I wonder if mom and pop shops were not as economical. I study consumer prices and I've found mom and pop shops are significantly more expensive than the big chains. I'm talking like 2x more expensive. This is in suburbia where there are lots of competition.

Ericson2314 5y ago
I think both are true. Anti-trust is a funny thing because one hand it is clearly needed for power dynamics, but on the other hand orthodox econ with its increasing price curves underestimates how many sorts of monopolies are in fact "natural". Put another way, anti-trust looks very different if one doesn't believe competition is a stable outcome in the long term. In the specific Walmart/Amazon case, I would like to see a nationalized warehouse network run by the postal service. Warehousing-distribution of goods is just "content-addressed post".
- camjohnson26 5y ago
  Every economy has information networks like roads, broadband, shipping services, etc, and government’s role in the economy should be to keep those networks fair and efficient. Free market competition is the best way to handle price discovery, but it becomes a problem when one company can take over the full information network. Most of the massive companies today have successfully captured an entire network or a huge part of one, Facebook with the social graph, Microsoft with OS, Amazon with AWS and online shopping, Apple with mobile devices. Any antitrust legislation should focus on opening up those networks, but without introducing the inefficiencies that show up any time government takes something over because of misaligned incentives.
- native_samples 5y ago
  It seems very unlikely that a government run warehouse network would have invested into Kiva Robotics like Amazon did. Their warehouse tech is a big part of their competitive advantage.
azinman2 5y ago
Part of that is because anti-trust law used to prevent discounts based upon scale, and that stop being enforced decades ago.
- JumpCrisscross 5y ago
  > anti-trust law used to prevent discounts based upon scale Do you have a source for this?
  - azinman2 5y ago
    It’s called the Robinson-Patman act. The legislative purpose was to amend the inadequate Clayton Act so as ". .. to curb and prohibit all devices by which large buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power." [1] It’s now interpreted based upon cost of manufacturing, so the FTC has this Q&A [2]: > Q: I operate two stores that sell compact discs. My business is being ruined by giant discount chains that sell their products for less than my wholesale cost. What can I do? A: Discount chains may be able to buy compact discs at a lower wholesale price because it costs the manufacturer less, on a per-unit basis, to deal with large-volume customers. If so, the manufacturer may have a "cost justification" defense to the differential pricing and the policy would not violate the Robinson-Patman Act. Note as [1] describes, this act was done in reaction to chains causing much distress. The nature of manufacturing changed, and as the notion from the 60s/70s that consumer pricing was the most important trait in anti-trust law, so enforcement stopped and now we have chains everywhere. [1] https://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=3621&context=lawreview https://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?arti... [2] https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/price-discrimination-robinson-patman https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

Ericson2314 5y ago

I think both are true. Anti-trust is a funny thing because one hand it is clearly needed for power dynamics, but on the other hand orthodox econ with its increasing price curves underestimates how many sorts of monopolies are in fact "natural". Put another way, anti-trust looks very different if one doesn't believe competition is a stable outcome in the long term. In the specific Walmart/Amazon case, I would like to see a nationalized warehouse network run by the postal service. Warehousing-distribution of goods is just "content-addressed post".

camjohnson26 5y ago
Every economy has information networks like roads, broadband, shipping services, etc, and government’s role in the economy should be to keep those networks fair and efficient. Free market competition is the best way to handle price discovery, but it becomes a problem when one company can take over the full information network. Most of the massive companies today have successfully captured an entire network or a huge part of one, Facebook with the social graph, Microsoft with OS, Amazon with AWS and online shopping, Apple with mobile devices. Any antitrust legislation should focus on opening up those networks, but without introducing the inefficiencies that show up any time government takes something over because of misaligned incentives.
native_samples 5y ago
It seems very unlikely that a government run warehouse network would have invested into Kiva Robotics like Amazon did. Their warehouse tech is a big part of their competitive advantage.

azinman2 5y ago

Part of that is because anti-trust law used to prevent discounts based upon scale, and that stop being enforced decades ago.

JumpCrisscross 5y ago
> anti-trust law used to prevent discounts based upon scale Do you have a source for this?
- azinman2 5y ago
  It’s called the Robinson-Patman act. The legislative purpose was to amend the inadequate Clayton Act so as ". .. to curb and prohibit all devices by which large buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power." [1] It’s now interpreted based upon cost of manufacturing, so the FTC has this Q&A [2]: > Q: I operate two stores that sell compact discs. My business is being ruined by giant discount chains that sell their products for less than my wholesale cost. What can I do? A: Discount chains may be able to buy compact discs at a lower wholesale price because it costs the manufacturer less, on a per-unit basis, to deal with large-volume customers. If so, the manufacturer may have a "cost justification" defense to the differential pricing and the policy would not violate the Robinson-Patman Act. Note as [1] describes, this act was done in reaction to chains causing much distress. The nature of manufacturing changed, and as the notion from the 60s/70s that consumer pricing was the most important trait in anti-trust law, so enforcement stopped and now we have chains everywhere. [1] https://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=3621&context=lawreview https://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?arti... [2] https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/price-discrimination-robinson-patman https://www.ftc.gov/tips-advice/competition-guidance/guide-a...