5 ms·

>Monopolies don't happen in a free market. They happen when the government outlaws competition. This is true for a subset of regulated monopolies, but there is

by bumby 5y ago

>Monopolies don't happen in a free market. They happen when the government outlaws competition. This is true for a subset of regulated monopolies, but there is also the concept of a natural monopoly which does not require any governmental intervention

WalterBright 5y ago
Name one!
- bumby 5y ago
  The most obvious historical example is Standard Oil, but many would consider social media companies to be natural monopolies in the current context. Here, read up for yourself. https://www.investopedia.com/terms/n/natural_monopoly.asp https://www.investopedia.com/terms/n/natural_monopoly.asp
  - WalterBright 5y ago
    SO never had a monopoly. Ironically, throughout the long anti-trust trial, SO's market share kept sliding. SO was never convicted of having a monopoly, it was convicted of certain business practices. > many would consider I don't. Many of the current top ones replaced the previous top ones. Not many even remember AOL.
    - bumby 5y ago
      I mean, they essentially operated 9 of every 10 refineries. That was enough for both the NJ and US courts to deem them a monopoly (yes, they used those words).[1] And since a monopoly is just “certain business practices” that unfairly constrain competition, your definition seems to be a difference without a distinction. [1] Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)
      - WalterBright 5y ago
        SO's market share declined substantially throughout the trial. How does that fit your thesis? See "Titan" by Chernow.
        bumby 5y ago
        If you agree that more risk tends to push prices lower with all else being equal, I don’t see that being indicative of evidence considering investors would presumably be pricing in regulation risk. But in any event the price at trial is not necessarily indicative of unfair anti-competitive business practices. The trial was not necessarily about the current practices at the time of the trial, but broke the business practices into three distinct periods dating back to 1870.
        WalterBright 5y ago
        Why did SO's "natural monopoly" keep sliding away from them throughout the trial period?
        bumby 5y ago
        I don’t think you’re tracking. There’s no guarantee a natural monopoly will remain in place forever or reuse we’d still be working by whale blubber light. What happened to the business during the trial is not necessarily relevant to the trial ruling. I think a better question for you to ask yourself is “why did the court determine they were acting in a monopolistic manner?” I’d suggest reading the previously referenced court ruling to get your answer.
        WalterBright 5y ago
        If you want to call SO a "natural monopoly", the evidence does not support that conclusion. Nor did the trial conclude SO was a monopoly. That's my point here. Rockefeller was convicted of being rich. That's the bottom line.
  - repsilat 5y ago
    This article[1] from Brookings says, >> At the time of the divestiture, the oil industry was becoming competitive because it was moving into Kansas, Oklahoma, Texas, Louisiana and California—states where Standard Oil didn’t have much power. The price of petroleum was actually falling in the years before the case, because these new fields were pumping so much crude. The breakup had no measurable effect on oil production, crude-oil prices or refined-product prices. (The article does say that antitrust actions were necessary to make cigarettes affordable, though.) For a rather less charitable take, [2] from the "Competitive Enterprise Institute" says, >> Standard Oil Co. of New Jersey v. United States had a defendant that was cutting prices while increasing output. The case also lacked evidence of either predatory pricing or consumer harm. After this quick bullet-point summary, there's more content below with references to other academic sources, page 2 is pretty interesting. > many would consider social media companies to be natural monopolies in the current context They have positive returns to scale, but even this phrasing ("social media companies") deflates the argument -- Facebook competes with Twitter competes with TikTok competes with Reddit competes with Youtube etc. They're big enough to exert market power, but - Some of them seem to dislike using that power (to the horror of authoritarians in many governments who want to co-opt it), and - If they abuse that power to the detriment of users (raising prices too high, banning enough communities) users will go elsewhere. 1: https://www.brookings.edu/opinions/if-it-aint-broke-dont-break-it-up/ https://www.brookings.edu/opinions/if-it-aint-broke-dont-bre... 2: https://assets.realclear.com/files/2021/01/1755_antitrust.pdf https://assets.realclear.com/files/2021/01/1755_antitrust.pd...
    - bumby 5y ago
      For just about any ruling, I’m sure you’ll find dissenting opinions. The only opinion that matters in the end is the court’s and they concluded it was a monopoly. For the record, with my limited understanding I don’t think “social media companies” are monopolies because they do not run afoul of general consumer prices because their products are typically free. They may deserve to be regulated under a different framework, but they don’t seem to fit the anti-trust paradigm. I brought them up because others, including the authors of the link I provided, consider them natural monopolies
      - 5y ago
- BirdieNZ 5y ago
  Land in desirable locations. You can't create more land in the middle of San Francisco, so the land-owners of the land in the middle of San Francisco have a natural monopoly on the land in the middle of San Francisco.
  - WalterBright 5y ago
    > Land in desirable locations. "Desirable" locations is a completely subjective term. > You can't create more land in the middle of San Francisco Yes, you can. We call them skyscrapers.
    - BirdieNZ 5y ago
      > "Desirable" locations is a completely subjective term. Alright, use "valuable" then. Value is derived from people's desire to purchase the land, which means valuable land is equivalent to desirable land. > Yes, you can. We call them skyscrapers. Skyscrapers aren't land. I'm not entirely sure you're conversing in good faith but I'll do my best to assume you are. Land is a natural monopoly, and the most classic of all. For example, the land surrounding Central Park in New York City is of limited supply. If you want land which borders, say, the west side of Central Park, then there is even less land available. If someone owns all of the land that borders the west side of Central Park, then no one else can use that land unless they are permitted to by the owner. This means that the owner has a natural monopoly over all land that borders the west side of Central Park. You cannot create more land that borders the west side of Central Park. Now, if you wanted to live in a house or apartment that borders the west side of Central Park, your only option is to negotiate with the land-owner. They may sell you the land, or rent the land to you (or rent you an apartment or house on that land). If living on the west side of Central Park is something desirable to you, then the land-owner can charge you the absolute maximum price you are willing to pay for living there. You have no alternative, except to not pay at all. If you are willing to pay $1000 a week to live on the west side of Central Park, the land-owner can charge $1000 a week. It is entirely independent of the labour and costs of the land-owner, and entirely based on your willingness to pay.

by bumby 5y ago

WalterBright 5y ago

Name one!

bumby 5y ago
The most obvious historical example is Standard Oil, but many would consider social media companies to be natural monopolies in the current context. Here, read up for yourself. https://www.investopedia.com/terms/n/natural_monopoly.asp https://www.investopedia.com/terms/n/natural_monopoly.asp
- WalterBright 5y ago
  SO never had a monopoly. Ironically, throughout the long anti-trust trial, SO's market share kept sliding. SO was never convicted of having a monopoly, it was convicted of certain business practices. > many would consider I don't. Many of the current top ones replaced the previous top ones. Not many even remember AOL.
  - bumby 5y ago
    I mean, they essentially operated 9 of every 10 refineries. That was enough for both the NJ and US courts to deem them a monopoly (yes, they used those words).[1] And since a monopoly is just “certain business practices” that unfairly constrain competition, your definition seems to be a difference without a distinction. [1] Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)
    - WalterBright 5y ago
      SO's market share declined substantially throughout the trial. How does that fit your thesis? See "Titan" by Chernow.
      - bumby 5y ago
        If you agree that more risk tends to push prices lower with all else being equal, I don’t see that being indicative of evidence considering investors would presumably be pricing in regulation risk. But in any event the price at trial is not necessarily indicative of unfair anti-competitive business practices. The trial was not necessarily about the current practices at the time of the trial, but broke the business practices into three distinct periods dating back to 1870.
        WalterBright 5y ago
        Why did SO's "natural monopoly" keep sliding away from them throughout the trial period?
        bumby 5y ago
        I don’t think you’re tracking. There’s no guarantee a natural monopoly will remain in place forever or reuse we’d still be working by whale blubber light. What happened to the business during the trial is not necessarily relevant to the trial ruling. I think a better question for you to ask yourself is “why did the court determine they were acting in a monopolistic manner?” I’d suggest reading the previously referenced court ruling to get your answer.
        WalterBright 5y ago
        If you want to call SO a "natural monopoly", the evidence does not support that conclusion. Nor did the trial conclude SO was a monopoly. That's my point here. Rockefeller was convicted of being rich. That's the bottom line.
- repsilat 5y ago
  This article[1] from Brookings says, >> At the time of the divestiture, the oil industry was becoming competitive because it was moving into Kansas, Oklahoma, Texas, Louisiana and California—states where Standard Oil didn’t have much power. The price of petroleum was actually falling in the years before the case, because these new fields were pumping so much crude. The breakup had no measurable effect on oil production, crude-oil prices or refined-product prices. (The article does say that antitrust actions were necessary to make cigarettes affordable, though.) For a rather less charitable take, [2] from the "Competitive Enterprise Institute" says, >> Standard Oil Co. of New Jersey v. United States had a defendant that was cutting prices while increasing output. The case also lacked evidence of either predatory pricing or consumer harm. After this quick bullet-point summary, there's more content below with references to other academic sources, page 2 is pretty interesting. > many would consider social media companies to be natural monopolies in the current context They have positive returns to scale, but even this phrasing ("social media companies") deflates the argument -- Facebook competes with Twitter competes with TikTok competes with Reddit competes with Youtube etc. They're big enough to exert market power, but - Some of them seem to dislike using that power (to the horror of authoritarians in many governments who want to co-opt it), and - If they abuse that power to the detriment of users (raising prices too high, banning enough communities) users will go elsewhere. 1: https://www.brookings.edu/opinions/if-it-aint-broke-dont-break-it-up/ https://www.brookings.edu/opinions/if-it-aint-broke-dont-bre... 2: https://assets.realclear.com/files/2021/01/1755_antitrust.pdf https://assets.realclear.com/files/2021/01/1755_antitrust.pd...
  - bumby 5y ago
    For just about any ruling, I’m sure you’ll find dissenting opinions. The only opinion that matters in the end is the court’s and they concluded it was a monopoly. For the record, with my limited understanding I don’t think “social media companies” are monopolies because they do not run afoul of general consumer prices because their products are typically free. They may deserve to be regulated under a different framework, but they don’t seem to fit the anti-trust paradigm. I brought them up because others, including the authors of the link I provided, consider them natural monopolies
    - 5y ago
BirdieNZ 5y ago
Land in desirable locations. You can't create more land in the middle of San Francisco, so the land-owners of the land in the middle of San Francisco have a natural monopoly on the land in the middle of San Francisco.
- WalterBright 5y ago
  > Land in desirable locations. "Desirable" locations is a completely subjective term. > You can't create more land in the middle of San Francisco Yes, you can. We call them skyscrapers.
  - BirdieNZ 5y ago
    > "Desirable" locations is a completely subjective term. Alright, use "valuable" then. Value is derived from people's desire to purchase the land, which means valuable land is equivalent to desirable land. > Yes, you can. We call them skyscrapers. Skyscrapers aren't land. I'm not entirely sure you're conversing in good faith but I'll do my best to assume you are. Land is a natural monopoly, and the most classic of all. For example, the land surrounding Central Park in New York City is of limited supply. If you want land which borders, say, the west side of Central Park, then there is even less land available. If someone owns all of the land that borders the west side of Central Park, then no one else can use that land unless they are permitted to by the owner. This means that the owner has a natural monopoly over all land that borders the west side of Central Park. You cannot create more land that borders the west side of Central Park. Now, if you wanted to live in a house or apartment that borders the west side of Central Park, your only option is to negotiate with the land-owner. They may sell you the land, or rent the land to you (or rent you an apartment or house on that land). If living on the west side of Central Park is something desirable to you, then the land-owner can charge you the absolute maximum price you are willing to pay for living there. You have no alternative, except to not pay at all. If you are willing to pay $1000 a week to live on the west side of Central Park, the land-owner can charge $1000 a week. It is entirely independent of the labour and costs of the land-owner, and entirely based on your willingness to pay.