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It's worth keeping in mind the well-known principle in economics that incumbent market participants, with large economies of scale, have a strong incentive to p
by nerdponx 3y ago
It's worth keeping in mind the well-known principle in economics that incumbent market participants, with large economies of scale, have a strong incentive to pursue regulations that increase fixed costs but don't substantially affect marginal costs, or are otherwise decreasing costs with respect to scale. This makes it harder to start a competing firm.
- wolverine876 3y agoThat is a risk, but regulation can also keep the market open to competition, preventing incumbants from abusing their market power. Antitrust law, for example, and the FTC do that.
- nerdponx 3y agoRight. But this is not a thread about the general merits of government regulation in business. This is about something specific, and this principle is essential to keep in mind when evaluating any specific new regulation.
- wolverine876 3y agoAll the principles are essential to keep in mind; I don't see why that one is priviledged.
- nerdponx 3y agoBecause we should have a high "index of suspicion" whenever we see incumbent corporations pushing for regulation that would suppress competition. If we want to have good regulations and effective regulatory agencies, we should be judicious and methodical about what regulations are adopted, who is granted enforcement authority, and what that authority consists of.
- wolverine876 3y ago> Because we should have a high "index of suspicion" whenever we see incumbent corporations pushing for regulation that would suppress competition. It's mostly circular reasoning: Why is it more important? Because we should have a high index of suscipicion, because it's more important. I think we should be equally suspect of people pushing against regulation, which also empowers the powerful.