8 ms·

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by bestouff 7mo ago

[flagged]

littlestymaar 7mo ago
[flagged]
- hn_throwaway_99 7mo ago
  As Peter Theil literally said, "Competition is for losers."
- youainti 7mo ago
  This is a perfect example of competition in microeconomics. If you've only been exposed to an introductory economics, you've missed out on a lot. This type of situation sounds like an amalgamation of a few exam questions from my first year of an econ PhD. "Cheap talk in a Bertrand market with entry costs and capacity constraints" or something. No I haven't worked it out but my intuition is that it would predict exactly what was observed: the threat of a new entrant with enough capacity risks loosing your entire business so you invest to expand your capacity to prevent that entry.
  - littlestymaar 7mo ago
    The problem isn't that econ PhDs don't have classes giving more nuanced views of the world, but the fact that people spend so much time with “introductory economics” that even Nobel prices will make nonsensical arguments based on those flawed concepts. It seems that spending several years working with models assuming that the earth is flat isn't being well compensated by one class on “imperfect flatness”. (I've contemplated doing an econ PhD myself before changing course, and I've been exposed to much more than econ 101).
- matheusmoreira 7mo ago
  > with the notable exception of people with lots of capital to wipe the competition out of the market then do a rug pull after the fact They used to be called robber barons.
  - WalterBright 7mo ago
    Ironically, during the anti-trust trial of Standard Oil, Rockefeller's market share kept slipping. His competitors figured out how to compete with him. As for Rockefeller being a "robber", the rise of Standard Oil resulted in the price of kerosene dropping 70%.
    - littlestymaar 7mo ago
      If technical advances make cost go down 90% but prices only goes down by 70%, someone is making tons of money at the expense of consumers. That's what happened with the telco by the way, the price is is still significantly lower than 40 years ago, but in the US it's still more expensive than it should.
      - WalterBright 7mo ago
        Margins are not owed to customers, whether they are large or small. Supply & Demand sets the price. For example, if you buy a car for $5000 and flip it for $10,000, you don't owe your customer a discount.
        littlestymaar 7mo ago
        “Supply and demand” refers to the idea that under competition, prices will go down to the marginal cost of production. When a cartel sets a price it's very much not “supply and demand” who sets the price, it's the cartel…
        WalterBright 7mo ago
        The cartel setting a price is still subject to the Law of Supply and Demand. The Law is not about setting a price, it is about how much sales you're going to get at a particular price point. Maximizing the price is not the same thing at all as maximizing profit. Standard Oil made more money by reducing prices, not maximizing them.
- raw_anon_1111 7mo ago
  This is provably not true. You can look at computers (besides Apple), cell phones (besides Apple), TVs, any commodity item, etc
  - littlestymaar 7mo ago
    Interestingly enough, all the examples you cited are being produced by Asian brands, where the various governments have specific policies designed to make companies actually engage in such a competition in order to take over the world markets. Now do banking, retail, real estate, insurance, healthcare, software, or any business where Asian governments are not actively subsidizing a race to the bottom competition and you'll see it how it works.
    - raw_anon_1111 7mo ago
      Software is easy - look at the App Store. Every piece of software and even the console market is moving away from pay once to shady pay to win mechanics. Google and Facebook make most of their money by giving things away and selling to advertising. The biggest retail stores squeeze their suppliers and compete on prices, healthcare everywhere else except the asinine system in the US is government backed. The fast food places compete on price and “fast casual” that costs slightly more are dying
HauntingPin 7mo ago
[flagged]
- xboxnolifes 7mo ago
  > ...one day, one of the municipal counselors just called up a friend who worked for a fiber laying company and asked them for a favor: put out a press release saying that they were “investigating” laying an undersea fiber to power a municipal fiber network on the little island. They called in a favor that put pressure on the company from public expectations.
  - HauntingPin 7mo ago
    Yes. What do you think happens in a competitive marketplace? Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console. That's literally competition. The details of how the "public pressure" came to be don't matter, because the monopoly didn't know about that. All they knew was there was a potential competitor, so they behaved according to that information. That's how it works.
    - karlgkk 7mo ago
      Frankly, I think you're trying to poke holes in a straightforward concept. And now you've dug your heels in and you're trying to justify it. But... let's ignore opinions and interpretations... > Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console This is completely inaccurate in every way possible. You even have the order of events backwards (Nintendo and Sony partnered first). There is in no way in which even the most charitable interpretation of this statement could bear out. Just about the only correct part is that you have some (but not all!) of the relevant parties involved. If you're wrong about such a well documented, cut and dry matter of historical record, then what else are you wrong about? :)
      - drfloyd51 7mo ago
        That isn’t actually refuting his original argument. Just proving his example false. Then you beg the question with a bit of a straw man fallacy thrown in.
wat10000 7mo ago
In other words, competition works, and lack of competition leaves you vulnerable.
hahahacorn 7mo ago
[flagged]
- jayd16 7mo ago
  I don't know. I feel like "price fixing until maybe there was a hint of competition" is pretty far from frictionless sphere, supply and demand economics. Competition was possible but was not working. A fake news brief is the supposed solution. That's not really competition actually lowering prices. That's the price fixing regime blinking for an unsubstantiated reason. It would be a different story if the friend's fiber laying company actually saw an opportunity and pursued it, but they didn't.
  - hahahacorn 7mo ago
    ISPs and other extremely capital intensive industries with a relatively fixed demand are always going to be warped markets. Nobody thinks they’re a spherical cow. Despite that, the single mechanism that works so well in a competitive market, the threat of competition, (this time) worked just the same in a 2 person market where you would expect the inefficiencies of a price fixing regime and for all decisions and investments to have to pass through (and have funds allocated to) an army of lawyers, politicians and special interest groups. That is objectively what happened and reframing it into a negative light is a choice grounded in emotion and not analysis. Have you ever taken an economics course? Nobody finishes a basic micro/macro course without an introduction to game theory. Game theory is the EXACT reason that N=2,3,4 markets struggle with competition and provide insights into the regulation and “rules” needed for markets with very low suppler cardinality. You thinking that anyone else expects a local ISP market to function efficiently and competitively is a failure of your own understanding, not of the system.
- bestouff 7mo ago
  [flagged]

[flagged]

littlestymaar 7mo ago

[flagged]

hn_throwaway_99 7mo ago
As Peter Theil literally said, "Competition is for losers."
youainti 7mo ago
This is a perfect example of competition in microeconomics. If you've only been exposed to an introductory economics, you've missed out on a lot. This type of situation sounds like an amalgamation of a few exam questions from my first year of an econ PhD. "Cheap talk in a Bertrand market with entry costs and capacity constraints" or something. No I haven't worked it out but my intuition is that it would predict exactly what was observed: the threat of a new entrant with enough capacity risks loosing your entire business so you invest to expand your capacity to prevent that entry.
- littlestymaar 7mo ago
  The problem isn't that econ PhDs don't have classes giving more nuanced views of the world, but the fact that people spend so much time with “introductory economics” that even Nobel prices will make nonsensical arguments based on those flawed concepts. It seems that spending several years working with models assuming that the earth is flat isn't being well compensated by one class on “imperfect flatness”. (I've contemplated doing an econ PhD myself before changing course, and I've been exposed to much more than econ 101).
matheusmoreira 7mo ago
> with the notable exception of people with lots of capital to wipe the competition out of the market then do a rug pull after the fact They used to be called robber barons.
- WalterBright 7mo ago
  Ironically, during the anti-trust trial of Standard Oil, Rockefeller's market share kept slipping. His competitors figured out how to compete with him. As for Rockefeller being a "robber", the rise of Standard Oil resulted in the price of kerosene dropping 70%.
  - littlestymaar 7mo ago
    If technical advances make cost go down 90% but prices only goes down by 70%, someone is making tons of money at the expense of consumers. That's what happened with the telco by the way, the price is is still significantly lower than 40 years ago, but in the US it's still more expensive than it should.
    - WalterBright 7mo ago
      Margins are not owed to customers, whether they are large or small. Supply & Demand sets the price. For example, if you buy a car for $5000 and flip it for $10,000, you don't owe your customer a discount.
      - littlestymaar 7mo ago
        “Supply and demand” refers to the idea that under competition, prices will go down to the marginal cost of production. When a cartel sets a price it's very much not “supply and demand” who sets the price, it's the cartel…
        WalterBright 7mo ago
        The cartel setting a price is still subject to the Law of Supply and Demand. The Law is not about setting a price, it is about how much sales you're going to get at a particular price point. Maximizing the price is not the same thing at all as maximizing profit. Standard Oil made more money by reducing prices, not maximizing them.
raw_anon_1111 7mo ago
This is provably not true. You can look at computers (besides Apple), cell phones (besides Apple), TVs, any commodity item, etc
- littlestymaar 7mo ago
  Interestingly enough, all the examples you cited are being produced by Asian brands, where the various governments have specific policies designed to make companies actually engage in such a competition in order to take over the world markets. Now do banking, retail, real estate, insurance, healthcare, software, or any business where Asian governments are not actively subsidizing a race to the bottom competition and you'll see it how it works.
  - raw_anon_1111 7mo ago
    Software is easy - look at the App Store. Every piece of software and even the console market is moving away from pay once to shady pay to win mechanics. Google and Facebook make most of their money by giving things away and selling to advertising. The biggest retail stores squeeze their suppliers and compete on prices, healthcare everywhere else except the asinine system in the US is government backed. The fast food places compete on price and “fast casual” that costs slightly more are dying

HauntingPin 7mo ago

[flagged]

xboxnolifes 7mo ago
> ...one day, one of the municipal counselors just called up a friend who worked for a fiber laying company and asked them for a favor: put out a press release saying that they were “investigating” laying an undersea fiber to power a municipal fiber network on the little island. They called in a favor that put pressure on the company from public expectations.
- HauntingPin 7mo ago
  Yes. What do you think happens in a competitive marketplace? Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console. That's literally competition. The details of how the "public pressure" came to be don't matter, because the monopoly didn't know about that. All they knew was there was a potential competitor, so they behaved according to that information. That's how it works.
  - karlgkk 7mo ago
    Frankly, I think you're trying to poke holes in a straightforward concept. And now you've dug your heels in and you're trying to justify it. But... let's ignore opinions and interpretations... > Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console This is completely inaccurate in every way possible. You even have the order of events backwards (Nintendo and Sony partnered first). There is in no way in which even the most charitable interpretation of this statement could bear out. Just about the only correct part is that you have some (but not all!) of the relevant parties involved. If you're wrong about such a well documented, cut and dry matter of historical record, then what else are you wrong about? :)
    - drfloyd51 7mo ago
      That isn’t actually refuting his original argument. Just proving his example false. Then you beg the question with a bit of a straw man fallacy thrown in.

wat10000 7mo ago

In other words, competition works, and lack of competition leaves you vulnerable.

hahahacorn 7mo ago

[flagged]

jayd16 7mo ago
I don't know. I feel like "price fixing until maybe there was a hint of competition" is pretty far from frictionless sphere, supply and demand economics. Competition was possible but was not working. A fake news brief is the supposed solution. That's not really competition actually lowering prices. That's the price fixing regime blinking for an unsubstantiated reason. It would be a different story if the friend's fiber laying company actually saw an opportunity and pursued it, but they didn't.
- hahahacorn 7mo ago
  ISPs and other extremely capital intensive industries with a relatively fixed demand are always going to be warped markets. Nobody thinks they’re a spherical cow. Despite that, the single mechanism that works so well in a competitive market, the threat of competition, (this time) worked just the same in a 2 person market where you would expect the inefficiencies of a price fixing regime and for all decisions and investments to have to pass through (and have funds allocated to) an army of lawyers, politicians and special interest groups. That is objectively what happened and reframing it into a negative light is a choice grounded in emotion and not analysis. Have you ever taken an economics course? Nobody finishes a basic micro/macro course without an introduction to game theory. Game theory is the EXACT reason that N=2,3,4 markets struggle with competition and provide insights into the regulation and “rules” needed for markets with very low suppler cardinality. You thinking that anyone else expects a local ISP market to function efficiently and competitively is a failure of your own understanding, not of the system.
bestouff 7mo ago
[flagged]