5 ms·

You can't create competition through regulation. Free markets allow competition and entrepreneurship creates it. You need both. Regulations reduce competition

by nickpp 5y ago

You can't create competition through regulation. Free markets allow competition and entrepreneurship creates it. You need both. Regulations reduce competition by raising the bar to entry and the unforeseen consequences of compliance.

Isinlor 5y ago
Actually the opposite is true. Only trough regulation you can create nonviolent free market competition. Otherwise, you end up with military competition as the easiest way to win is to dominate and subjugate opponents trough raw force. Slavery and colonization are this types of free market distortions when unrestricted by regulation. So, regulations are necessary part of free markets. The question is what regulations are good and what regulations are bad. There are empirical and game theoretical examples where regulations create better outcomes than nonviolent free market competition. There are games where the tragedy of the commons occur i.e. Nash equilibrium creates bad outcome [0]. This is also true in the real world e.g. collapse of the Atlantic northwest cod fishery. [0] https://www.youtube.com/watch?v=6wNj9hOIt9g https://www.youtube.com/watch?v=6wNj9hOIt9g [1] https://en.wikipedia.org/wiki/Collapse_of_the_Atlantic_northwest_cod_fishery https://en.wikipedia.org/wiki/Collapse_of_the_Atlantic_north...
- nickpp 5y ago
  Having a rule of law is not a regulation, is the most basic fundamental prerequisite to having a functioning modern, democratic society. Free markets are built on top of that and regulations come on top of free markets. And free markets imply free people - slavery is the opposite of that. Taxing externalities is also necessary, and it's tax, not a regulation. But that is something we're still working on, with little success it seems. See the carbon/pollution international issues with China, Russia, Australia.
  - Isinlor 5y ago
    You are bending words like regulation and tax to fit your preconceptions in way that disagrees with how other people understand them. Also, a simple tax can not solve the tragedy of the commons for fisheries as long as fishing will remain profitable. Nash equilibrium involving full exploitation remains as long as there is a profit. Fish are not an externality that can be reduced to avoid taxation, but the objective. While cap on fishing will work.
  - deleted 5y ago
    [deleted]
kome 5y ago
> You can't create competition through regulation. real world experience suggests the contrary is true.
- nickpp 5y ago
  Some examples would help, I am not aware of any.
  - skywal_l 5y ago
    AT&T: https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System
    - nickpp 5y ago
      Bells's monopoly was instituted by the government. Using regulation to fix your own previous bad regulation does not suddenly make you a free market savior.
      - skywal_l 5y ago
        > Bells's monopoly was instituted by the government What actions the US government took to "institute" Bell's monopoly?
        nickpp 5y ago
        Oh, the usual: patents and regulations. The end result it was that you weren't allowed to create a competing network or even use a non-approved telephone on Bell's network.
jltsiren 5y ago
Of course you can. Competition and free markets are orthogonal concepts. Competition is a process that exists within any regulatory framework, while free markets refer to the extent and stability of the regulations. Infrastructure is the usual example. If your company owns something like a cellular network or a local power grid, the EU requires that you let other businesses use it for a fair price to sell their services to customers. This regulation creates more competition and lowers the prices for customers, while simultaneously making businesses more efficient and less profitable.
- ClumsyPilot 5y ago
  "Competition and free markets are orthogonal concepts." Surely a marjet without competition, i.e. monopolised, is no longer free? Or what does 'free' mean?
  - kome 5y ago
    > Or what does 'free' mean? it depends to whom you ask. in the US, for a long time, anti-trust was kinda cozy with monopolies - they were accepted as the natural outcome of a free market: the most efficient solution. In the EU there is more emphasis on market competition, and big monopolists are seen as problematic.
    - ClumsyPilot 5y ago
      "natural outcome of a free market: the most efficient solution." The same argument that justifies monopoly also justifies soviet-style central planning. It just changed the 'monopolist' in charge.
- nickpp 5y ago
  EU had to add regulation to allow startups using other's infrastructure because of the existing regulation that makes laying said infrastructure so difficult. Do not confuse regulations made to fix even worse regulation with an actual healthy, competitive free market. In Eastern Europe, after the fall of communism, people would lay Ethernet wire between apartment buildings to create ad-hoc communication networks. There were dozens of them. Today that is illegal and we only have a single Internet provider per city block.
ClumsyPilot 5y ago
"Regulations reduce competition by raising the bar to entry" This is literally wrong. OpenBanking only applies to the biggest banks and not little guys, and it allows little guys to access data stored in huge banks. How does thay reduce competition? It reduces bar to entry
- nickpp 5y ago
  Banking is one of the most heavily regulated and lacking competitions domains I know. This is why we have innovation in fin-tech startups but banking-startups only in crypto, where regulation is yet fairly light.
  - ClumsyPilot 5y ago
    "this is why we have innovation in fin-tech startups but banking-startups only in crypto" I can think of 10 startup banks like monzo and starling and have accounts in 4 of them, where is this lack of competition? Is it also regulator's fault there is no competition in running water and sewer providers? In your world there is no such thing as capital requirements, barriers to entry, natural monopoly, all issues are summed as 'regulation = bad"

by nickpp 5y ago

Isinlor 5y ago

Actually the opposite is true. Only trough regulation you can create nonviolent free market competition. Otherwise, you end up with military competition as the easiest way to win is to dominate and subjugate opponents trough raw force. Slavery and colonization are this types of free market distortions when unrestricted by regulation. So, regulations are necessary part of free markets. The question is what regulations are good and what regulations are bad. There are empirical and game theoretical examples where regulations create better outcomes than nonviolent free market competition. There are games where the tragedy of the commons occur i.e. Nash equilibrium creates bad outcome [0]. This is also true in the real world e.g. collapse of the Atlantic northwest cod fishery. [0] https://www.youtube.com/watch?v=6wNj9hOIt9g https://www.youtube.com/watch?v=6wNj9hOIt9g [1] https://en.wikipedia.org/wiki/Collapse_of_the_Atlantic_northwest_cod_fishery https://en.wikipedia.org/wiki/Collapse_of_the_Atlantic_north...

nickpp 5y ago
Having a rule of law is not a regulation, is the most basic fundamental prerequisite to having a functioning modern, democratic society. Free markets are built on top of that and regulations come on top of free markets. And free markets imply free people - slavery is the opposite of that. Taxing externalities is also necessary, and it's tax, not a regulation. But that is something we're still working on, with little success it seems. See the carbon/pollution international issues with China, Russia, Australia.
- Isinlor 5y ago
  You are bending words like regulation and tax to fit your preconceptions in way that disagrees with how other people understand them. Also, a simple tax can not solve the tragedy of the commons for fisheries as long as fishing will remain profitable. Nash equilibrium involving full exploitation remains as long as there is a profit. Fish are not an externality that can be reduced to avoid taxation, but the objective. While cap on fishing will work.
- deleted 5y ago
  [deleted]

kome 5y ago

> You can't create competition through regulation. real world experience suggests the contrary is true.

nickpp 5y ago
Some examples would help, I am not aware of any.
- skywal_l 5y ago
  AT&T: https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System
  - nickpp 5y ago
    Bells's monopoly was instituted by the government. Using regulation to fix your own previous bad regulation does not suddenly make you a free market savior.
    - skywal_l 5y ago
      > Bells's monopoly was instituted by the government What actions the US government took to "institute" Bell's monopoly?
      - nickpp 5y ago
        Oh, the usual: patents and regulations. The end result it was that you weren't allowed to create a competing network or even use a non-approved telephone on Bell's network.

jltsiren 5y ago

Of course you can. Competition and free markets are orthogonal concepts. Competition is a process that exists within any regulatory framework, while free markets refer to the extent and stability of the regulations. Infrastructure is the usual example. If your company owns something like a cellular network or a local power grid, the EU requires that you let other businesses use it for a fair price to sell their services to customers. This regulation creates more competition and lowers the prices for customers, while simultaneously making businesses more efficient and less profitable.

ClumsyPilot 5y ago
"Competition and free markets are orthogonal concepts." Surely a marjet without competition, i.e. monopolised, is no longer free? Or what does 'free' mean?
- kome 5y ago
  > Or what does 'free' mean? it depends to whom you ask. in the US, for a long time, anti-trust was kinda cozy with monopolies - they were accepted as the natural outcome of a free market: the most efficient solution. In the EU there is more emphasis on market competition, and big monopolists are seen as problematic.
  - ClumsyPilot 5y ago
    "natural outcome of a free market: the most efficient solution." The same argument that justifies monopoly also justifies soviet-style central planning. It just changed the 'monopolist' in charge.
nickpp 5y ago
EU had to add regulation to allow startups using other's infrastructure because of the existing regulation that makes laying said infrastructure so difficult. Do not confuse regulations made to fix even worse regulation with an actual healthy, competitive free market. In Eastern Europe, after the fall of communism, people would lay Ethernet wire between apartment buildings to create ad-hoc communication networks. There were dozens of them. Today that is illegal and we only have a single Internet provider per city block.

ClumsyPilot 5y ago

"Regulations reduce competition by raising the bar to entry" This is literally wrong. OpenBanking only applies to the biggest banks and not little guys, and it allows little guys to access data stored in huge banks. How does thay reduce competition? It reduces bar to entry

nickpp 5y ago
Banking is one of the most heavily regulated and lacking competitions domains I know. This is why we have innovation in fin-tech startups but banking-startups only in crypto, where regulation is yet fairly light.
- ClumsyPilot 5y ago
  "this is why we have innovation in fin-tech startups but banking-startups only in crypto" I can think of 10 startup banks like monzo and starling and have accounts in 4 of them, where is this lack of competition? Is it also regulator's fault there is no competition in running water and sewer providers? In your world there is no such thing as capital requirements, barriers to entry, natural monopoly, all issues are summed as 'regulation = bad"