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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 g

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
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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

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