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Markets do not instantly become monopolized, but they do tend that way, and will also eagerly form cartels unless stopped by regulation. Of course it matters w

by mcv 3y ago

Markets do not instantly become monopolized, but they do tend that way, and will also eagerly form cartels unless stopped by regulation. Of course it matters what kind of regulation; it's also possible to regulate markets in a way that protects monopolies, and some governments do that. So it's important to have a government that understands the importance of a free market. To give you some examples, the Dutch markets for health insurance and energy are entirely privatised but heavily regulated, and quite competitive. It's easy to switch from one provider to another, and so they compete hard on price. Although perhaps more so in the early days after privatisation than more recently. On the other hand, the market for software is not very regulated, it's heavily monopolised. Sometimes the EU makes moves to increase competition, but that's only piecemeal and not always terribly effective; Microsoft still rules the desktop, except in those areas where Apple now rules it.

ludwigDual 3y ago
> Markets do not instantly become monopolized, but they do tend that way, and will also eagerly form cartels unless stopped by regulation. Monopolization requires control of land or resources. This is because any cartel's attempt to set artificially high prices can be undercut by new entrants to the market who aren't in the cartel. > On the other hand, the market for software is not very regulated, it's heavily monopolised. Software is monopolized primarily through regulated monopolies on software (re)production i.e. copyright.
- mcv 3y ago
  There's plenty of pirated Windows around, but everybody still has to use Windows. Linux got into the gaming market only by supporting the Windows apis, and that support is still not quite perfect. It's not copyright that monopolises software, but api support. The need to reverse engineer other people's work. A lack of open standards. There would be more competition possible in software if regulation mandated open standards and open apis. So no, you don't need control of land to enable monopolization. You don't need IP law either. There are a million different factors that can drive monopolization, and many of those factors do require some degree of regulation to mitigate them. Although you could argue that corporations themselves are a government-created construct, and removing those would remove the problem. That could be true, but that's a very big step.
  - ludwigDual 3y ago
    > There's plenty of pirated Windows around, but everybody still has to use Windows. The threat of jail time for people sharing pirated copies or circumventing copyright protected measures changes the pros/cons people weigh whether or not some people copy or reverse engineer despite those risks. There would be a lot more competition if pirates weren't incurring all these additional risks and were able to compete fairly without state backed copyright monopolies. > There are a million different factors that can drive monopolization The primary driver is restricting competition. If your competition is unrestricted then why would they join your cartel when they can outcompete you? Someone will always see that they can get a larger piece of the pie by outcompeting the cartel. Monopolies always use force to prevent winning in fair competition.
    - mcv 3y ago
      One thing that they have often done in the past, is to temporarily drop their prices to outcompete newcomers, making it impossible for newcomers to outcompete them, and raising their prices back up once the newcomer is gone. The established monopolists always have deeper pockets than the newcomers. I'd love to see how you stop that without regulation.
      - ludwigDual 3y ago
        > One thing that they have often done in the past, is to temporarily drop their prices to outcompete newcomers, making it impossible for newcomers to outcompete them, and raising their prices back up once the newcomer is gone. Could you give examples of this happening? When the prices are low that sounds like a good outcome for their customers. Assuming the price drop doesn't affect other aspects customers care about like quality. The problem is when prices are raised above what they would otherwise be in a competitive market. You phrased this as "once the newcomer is gone", but there isn't anything preventing another newcomer from emerging, or several. The action of raising prices is openly visible to the market. This will attract entrepreneurs to the industry as a result of the perceived success of the monopolistic firm. In other words greedily raising prices above what the market wants to pay is a suicidal move for a single firm that relies on its customers to continue to buy whatever it is selling. This opens a market opportunity for newcomers where it did not exist before the price hike as customers would be encouraged to look for an alternatives. Monopolies backed by force are not reliant on their customers' voluntary decisions in this way so the analysis above only applies to situations that prevent forcing customers to choose a particular firm against their wishes.

by mcv 3y ago

ludwigDual 3y ago

> Markets do not instantly become monopolized, but they do tend that way, and will also eagerly form cartels unless stopped by regulation. Monopolization requires control of land or resources. This is because any cartel's attempt to set artificially high prices can be undercut by new entrants to the market who aren't in the cartel. > On the other hand, the market for software is not very regulated, it's heavily monopolised. Software is monopolized primarily through regulated monopolies on software (re)production i.e. copyright.

mcv 3y ago
There's plenty of pirated Windows around, but everybody still has to use Windows. Linux got into the gaming market only by supporting the Windows apis, and that support is still not quite perfect. It's not copyright that monopolises software, but api support. The need to reverse engineer other people's work. A lack of open standards. There would be more competition possible in software if regulation mandated open standards and open apis. So no, you don't need control of land to enable monopolization. You don't need IP law either. There are a million different factors that can drive monopolization, and many of those factors do require some degree of regulation to mitigate them. Although you could argue that corporations themselves are a government-created construct, and removing those would remove the problem. That could be true, but that's a very big step.
- ludwigDual 3y ago
  > There's plenty of pirated Windows around, but everybody still has to use Windows. The threat of jail time for people sharing pirated copies or circumventing copyright protected measures changes the pros/cons people weigh whether or not some people copy or reverse engineer despite those risks. There would be a lot more competition if pirates weren't incurring all these additional risks and were able to compete fairly without state backed copyright monopolies. > There are a million different factors that can drive monopolization The primary driver is restricting competition. If your competition is unrestricted then why would they join your cartel when they can outcompete you? Someone will always see that they can get a larger piece of the pie by outcompeting the cartel. Monopolies always use force to prevent winning in fair competition.
  - mcv 3y ago
    One thing that they have often done in the past, is to temporarily drop their prices to outcompete newcomers, making it impossible for newcomers to outcompete them, and raising their prices back up once the newcomer is gone. The established monopolists always have deeper pockets than the newcomers. I'd love to see how you stop that without regulation.
    - ludwigDual 3y ago
      > One thing that they have often done in the past, is to temporarily drop their prices to outcompete newcomers, making it impossible for newcomers to outcompete them, and raising their prices back up once the newcomer is gone. Could you give examples of this happening? When the prices are low that sounds like a good outcome for their customers. Assuming the price drop doesn't affect other aspects customers care about like quality. The problem is when prices are raised above what they would otherwise be in a competitive market. You phrased this as "once the newcomer is gone", but there isn't anything preventing another newcomer from emerging, or several. The action of raising prices is openly visible to the market. This will attract entrepreneurs to the industry as a result of the perceived success of the monopolistic firm. In other words greedily raising prices above what the market wants to pay is a suicidal move for a single firm that relies on its customers to continue to buy whatever it is selling. This opens a market opportunity for newcomers where it did not exist before the price hike as customers would be encouraged to look for an alternatives. Monopolies backed by force are not reliant on their customers' voluntary decisions in this way so the analysis above only applies to situations that prevent forcing customers to choose a particular firm against their wishes.