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> "Middlemen are required by law to participate in the transaction" This is a non-standard way of describing the concept here. The actual concept at work is a
by CPLX 3y ago
> "Middlemen are required by law to participate in the transaction"
This is a non-standard way of describing the concept here.
The actual concept at work is a prohibition against vertical integration.
There are plenty of examples of why this can be a problem dating back to the original Standard Oil trust that’s the archetypal example which spawned the need for antitrust laws.
A very clear example of laws against vertical integration is finance, where it’s just illegal to operate without middlemen. For example one firm can’t be a broker, dealer, and custodian of assets all at once. For very good reasons.
We’re seeing plenty examples of vertical integration being a problem today. One example is Amazon, another is pharmacy PBMs owned by insurers.
Maybe it’s an issue in this example as well, maybe not. But consolidation leads to market power and concentration and market power and consolidation are the main barriers to free markets in the US today.
Which means the original comment I’m responding to is just ideological blindness. The way to answer questions like this is by determining the actual consequences, not assuming a spherical cow.
- AnthonyMouse 3y ago> The actual concept at work is a prohibition against vertical integration. Vertical integration is when you have two plausibly separable products that the maker requires you to buy both together. A good example in this context would be cars and car repair services. A law that prohibited automakers from locking out independent repair shops would be a completely different thing. Whereas "cars" and "car sales" aren't really separable markets -- it's just a single product and the act of purchasing it. > The way to answer questions like this is by determining the actual consequences, not assuming a spherical cow. The point is that a cow may not be a perfect sphere but it's still kinda roundish and suitable for use as a first approximation. At which point you need to articulate not that the map isn't the territory (which everybody knows) but rather why the differences are relevant in this case.