3 ms·

If there were thirty companies competing in the space then it could be good for consumers - e.g. by allowing economies of scale for the company and so reduced p

• toyg 3y ago
  It should be noted that "economies of scale" works in manufacturing and distribution, but doesn't really work in software or other creative endeavours - in fact, creative teams are often more impactful and cost-effective (and hence cheaper) the smaller the company is. Antitrust law should really get amended with that framework in mind.
  • da_chicken 3y ago
    Per se economies of scale don't work in all areas of business, but there is increased efficiency in centralizing nearly anything. That's exactly why standards get created in software as well as anything, and why hierarchies and specialization of labor happen. The problem with monopolies -- and monarchies for that matter -- isn't that they're inefficient. They're incredibly efficient. It's merely that the gains are almost universally used to enrich the owners of the means at everyone else's expense.
    • lesuorac 3y ago
      Well it depends on your definition of efficiency. In a perfectly competitive (and perfect information) marketplace there will be more goods sold than in a monopolistic one. So in terms of resource allocations its inefficient. There's a graph on this page title "Perfect Competition, Monopoly, and Efficiency" [1] that shows how since the monopoly can price set they choose a higher price than where demand meets supply since it results in higher profits. This isn't achievable in a competitive marketplace as then somebody else would just undercut them. Interestingly you can correct this inefficiency by subsidizing a monopoly so that it offers the correct amount of supply. [1]: https://saylordotorg.github.io/text_principles-of-microeconomics-v2.0/s13-03-assessing-monopoly.html https://saylordotorg.github.io/text_principles-of-microecono...
    • toyg 3y ago
      Monopolies are often extremely inefficient. One word: IE6. Sapping web evolution didn't really gain anything for anyone, not even MS. Standardization ≠ centralization, btw.
      • swexbe 3y ago
        Ie monopoly was extremely efficient from a profits perspective. Slow updates, low dev costs.
        • berniedurfee 3y ago
          Right, I think that’s part of what makes these types of monopolies particularly bad; efficiency no longer matters. When everyone else is locked out of competing, the market owners lose incentive to do anything but maintain status quo. There’s an interesting psychology here. We think of business leaders as hyper competitive, but they often seem to try to get to a place where they not only beat their competitors, but try to lock them out of the playing field. Once there’s little or no threat from competition, doesn’t that get boring? Athletes are competitive, but I think in a different way. I don’t think an athlete would find much enjoyment if they figured out a way to always be the only ones on the track, slowly meandering around by themselves.
      • nine_k 3y ago
        IE6 might even be okay (though it was not); it's also far enough in the past that not everyone has a real memory of it. A really good, palpable example of monopolies having a stifling effect is internet access, especially in non-urban US areas.
    • deleted 3y ago
      [deleted]
  • mlyle 3y ago
    > fact, creative teams are often more impactful and cost-effective (and hence cheaper) the smaller the company is. There's obvious cases where there's small teams that make outsized impacts and teams that grow too unwieldy to manage. But there's a reason why we don't have 300 Linux Kernel projects: there would be a whole lot of duplication of effort and it would cost 300x as much. Indeed, software has massive economies of scale because duplication is basically free. It has a bit more of a tendency to fall into monopoly or oligopoly as a result: there's barriers to entry but no production costs.
  • subtra3t 3y ago
    I think what you mean by economies of scale are purchasing EoS. There are, I believe, many other forms of EoS that do not revolve around bulk discounts when buying raw materials. For example there are EoS that revolve around borrowing from banks [1], which is something that every big business regardless of industry does. Also economies of scale do work in software/creative ventures. However these tend to be cancelled out by other diseconomies of scale that are caused primarily by ineffective communication, aversion to change, and people (and government's) changing attitudes to larger companies [2]. What you referred to about creative teams being more cost-effective the smaller the company follows logically from most diseconomies of scale. For example in large companies the biggest decision makers tend to be isolated from the results of their decisions. This is in part because decisions take many weeks/months to be properly evaluated by a team of analysts (who may suffer from their own economies of scale if the business is large enough) and partly (I don't think this is written about but just my own opinion) because the biggest decision-makers will have the most authority and hence their subordinates will not be eager to tell them that their decisions had a negative response. If anybody finds any fault in this comment please reply to it. Please be polite. [1]: when a large company borrows from a bank they usually obtain lower interest rates as large companies usually tend to borrow large sums of money on which even a low interest is still very high. [2]: if a company like Google makes decisions that could, from 1 particular angle, be considered as anti-competitive the government is more likely to consider the situation from that 1 particular angle rather than if a smaller company takes the same decision. However, this assumes a perfectly functional government in a MEDC (as LEDCs won't usually go after monopolies since they want foreign investment from large companies) that also happens to be non-corrupt