4 ms·

Anti-trust measures wouldn't necessarily help with supply chain fragility. If our markets were perfectly competitive with many participants, they'd have an eve

Anti-trust measures wouldn't necessarily help with supply chain fragility. If our markets were perfectly competitive with many participants, they'd have an even more 'efficient' supply side and the pressure to rely on the lowest cost - or highest quality - source would be even stronger. In such markets, a competitor whose source of goods is slightly cheaper that yours will almost instantly capture all of your market share, so there's little room to pick a high cost local producer (unless you have the capital buffer to sustain losses until your competitors suffer a supply chain shock). A monopolist would accrue greater short term profits by having a hyper efficient fragile supply chain. However, it's not obvious that the profit incentive of the monopolist is higher than the survival incentive of the competitive agent. Tariffs, quotas and local-bias regulation could help to localise supply chains in either market structure.

n4r9 5y ago
Monopolies can implement efficiency gains and lock-in strategies that companies with less market share can't. For example, imagine grain being shipped across an ocean. Initially there are multiple shipping companies providing transport services, with their own models of ships and way of doing things. Over time, GrainMove Co buys out the other big players and becomes the main provider. In a bid for dominance, they buy up the ports on both sides so that competitors either have to pay exorbitant fees to dock, or build their own ports. They introduce a fleet of ships of the same model & capacity in order to streamline their logistics management. Then they start manufacturing container crates and modify the ships so that only their containers fit on them, forcing customers to also hire their containers in order to ship grain. There are now a number of weak points making the industry less robust. An unexpected fault or parts shortage for that specific type of ship. A sudden increase in demand for containers because a toxin from a disease of the grain means they can only be used once. All these are suddenly not just inconveniences that the market can adapt to, but major disruptions to the food chain.

n4r9 5y ago

Monopolies can implement efficiency gains and lock-in strategies that companies with less market share can't. For example, imagine grain being shipped across an ocean. Initially there are multiple shipping companies providing transport services, with their own models of ships and way of doing things. Over time, GrainMove Co buys out the other big players and becomes the main provider. In a bid for dominance, they buy up the ports on both sides so that competitors either have to pay exorbitant fees to dock, or build their own ports. They introduce a fleet of ships of the same model & capacity in order to streamline their logistics management. Then they start manufacturing container crates and modify the ships so that only their containers fit on them, forcing customers to also hire their containers in order to ship grain. There are now a number of weak points making the industry less robust. An unexpected fault or parts shortage for that specific type of ship. A sudden increase in demand for containers because a toxin from a disease of the grain means they can only be used once. All these are suddenly not just inconveniences that the market can adapt to, but major disruptions to the food chain.