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> In practice, there is no monopoly that does not improve consumer welfare. What? How do monopolies help the consumer?

Barrin92 4y ago
by acting as a collective mechanism to pursue interests of individual consumers. Trivial example, Apple shutting down Facebook's ad tracking, which is almost certainly an interest of Apple users they could not individually pursue. In fact the government is nothing else but a very large version of this, a big monopolist who solves a collective action problem.
- cercatrova 4y ago
  But a monopolist could do anything they want, and often do, that is not in the benefit of the consumer. For example, Standard Oil. Or Microsoft bundling a browser and killing Netscape. Or even Apple, that now is looking into running their own ad business after killing their competitors. Some of these may look good for consumers in the short term, but make no mistake, monopolies are not good for consumers.
  - Barrin92 4y ago
    they can't do anything they want because they still face the risk of replacement. Monopolistic competition is the dominant form of activity in innovative economies, temporarily outsized profits scale enable innovation and long term planning. (which benefits consumers) MySpace in 2007 had 80% of social network traffic, turns out it could not do what it wanted. Advanced tech economies generally consist of monopolists replacing each other, not bazaar economies.
    - cercatrova 4y ago
      > they can't do anything they want because they still face the risk of replacement Not necessarily, especially if the switching cost is too high. For example, if Microsoft does something monopolistic, which they had done, people aren't going to switch to Linux. Therefore the government had to step in.
    - barneygale 4y ago
      > they can't do anything they want because they still face the risk of replacement Less risk than if they weren't monopolies, which is the entire point.
    - blackoil 4y ago
      MySpace isn't a good example because it was early in a growing and changing space. Better example are Windows, duopoly of iOS and Android. It may still be possible to beat a monopoly by being extremely good and aggressive right on time when your competitor is napping. e.g. Firefox and Chrome vs IE. If IE team hadn't been dismantled and added tabs and other UI features, worked on performance and security improvement, we may have been using IE 25.
- Volundr 4y ago
  Except there is no guarantee they use that collective power for the customer's benefit. See: basically any actual monopoly (Apply isn't), including power and internet monopolies.
  - kmeisthax 4y ago
    Aaaaand that's the reason why monopoly law actually exists. There's no democratic control over corporations so they should not wield power like governments do. Shareholder democracy does not count.
kixiQu 4y ago
I would cede "there is no monopoly that can't be argued to improve consumer welfare in some way (even if it's actually terrible for consumers)"
Nomentatus 4y ago
I gonna disagree with everybody, by agreeing with everybody: Rockefeller's Standard Oil benefited consumers by providing much safer oil at a higher price; the previous race to the bottom delivered low prices - too low, only highly volatile fuel with an unpredictable mix could be produced for such low prices. But Standard Oil also harmed consumers with high prices, particularly over time, compared to government oversight; say by regulation or cerification of refinerys. So it was broken up, eventually.

by acting as a collective mechanism to pursue interests of individual consumers. Trivial example, Apple shutting down Facebook's ad tracking, which is almost certainly an interest of Apple users they could not individually pursue. In fact the government is nothing else but a very large version of this, a big monopolist who solves a collective action problem.

cercatrova 4y ago
But a monopolist could do anything they want, and often do, that is not in the benefit of the consumer. For example, Standard Oil. Or Microsoft bundling a browser and killing Netscape. Or even Apple, that now is looking into running their own ad business after killing their competitors. Some of these may look good for consumers in the short term, but make no mistake, monopolies are not good for consumers.
- Barrin92 4y ago
  they can't do anything they want because they still face the risk of replacement. Monopolistic competition is the dominant form of activity in innovative economies, temporarily outsized profits scale enable innovation and long term planning. (which benefits consumers) MySpace in 2007 had 80% of social network traffic, turns out it could not do what it wanted. Advanced tech economies generally consist of monopolists replacing each other, not bazaar economies.
  - cercatrova 4y ago
    > they can't do anything they want because they still face the risk of replacement Not necessarily, especially if the switching cost is too high. For example, if Microsoft does something monopolistic, which they had done, people aren't going to switch to Linux. Therefore the government had to step in.
  - barneygale 4y ago
    > they can't do anything they want because they still face the risk of replacement Less risk than if they weren't monopolies, which is the entire point.
  - blackoil 4y ago
    MySpace isn't a good example because it was early in a growing and changing space. Better example are Windows, duopoly of iOS and Android. It may still be possible to beat a monopoly by being extremely good and aggressive right on time when your competitor is napping. e.g. Firefox and Chrome vs IE. If IE team hadn't been dismantled and added tabs and other UI features, worked on performance and security improvement, we may have been using IE 25.
Volundr 4y ago
Except there is no guarantee they use that collective power for the customer's benefit. See: basically any actual monopoly (Apply isn't), including power and internet monopolies.
- kmeisthax 4y ago
  Aaaaand that's the reason why monopoly law actually exists. There's no democratic control over corporations so they should not wield power like governments do. Shareholder democracy does not count.

kixiQu 4y ago

I would cede "there is no monopoly that can't be argued to improve consumer welfare in some way (even if it's actually terrible for consumers)"

Nomentatus 4y ago

I gonna disagree with everybody, by agreeing with everybody: Rockefeller's Standard Oil benefited consumers by providing much safer oil at a higher price; the previous race to the bottom delivered low prices - too low, only highly volatile fuel with an unpredictable mix could be produced for such low prices. But Standard Oil also harmed consumers with high prices, particularly over time, compared to government oversight; say by regulation or cerification of refinerys. So it was broken up, eventually.