4 ms·

Regulations create monopolies. Even when regulations are aimed at curbing the control of giants, smaller players usually can't afford them and lose market share

Regulations create monopolies. Even when regulations are aimed at curbing the control of giants, smaller players usually can't afford them and lose market share. This is actually taught as a competitive advantage strategy in business school. Corporations lobby the government to implement laws that seem to hurt them but in actuality create an uneven playing field where marketshare becomes available due to the higher implementation cost.

podgorniy 4mo ago
Aren't monopolies is what we end up by default if have no regulation at all? And yes, not every regulation destroys monopoly, but regulation is the only thing that could break one.
- nba456_ 4mo ago
  > Aren't monopolies is what we end up by default if have no regulation at all? No.
  - maybewhenthesun 4mo ago
    19th century begs to differ. A better answer would be 'not always'. The proposed regulations forcing everybody to use google or apple are ridiculous and very much the opposite of the kind of regulations we need though...
    - ulbu 4mo ago
      or “sometimes not, until more data arrives”.
- Arkhaine_kupo 4mo ago
  > Aren't monopolies is what we end up by default if have no regulation at all? No. Monopolies are only inevitable if the goods aren't elastic, if there is a large cost of entry into the market, or if its a market you can create a moat that is unsurmountable. Many markets don't have that even with 0 regulation, but might have second order problems like firms creating unsafe products for example. But in general regulations almost always even unindentedly raise the cost to enter the market. If you make a new regulation that food needs to be safe, then the company needs to pay a safety inspection that a small home-made recipe might not be able to afford (to give a simple example). At the same time, we now have uber large corporations due to non elastic parts of supply chain (like land) or moats that are insurmountable (like access to US capital). In which case, the FCC should break up monopolies as the current market is not catering to end users and consumers but to owners, which is why the Stock market has been in a never ending bull run.
  - throwwwll 4mo ago
    [flagged]
    - philipallstar 4mo ago
      > Spoken like a true 120-year who trusts blindly everything he hears online from Rothbard This ad hominem stuff is genuinely worthless.
      - maybewhenthesun 4mo ago
        I don't think so. Because the theories about elastic markets and monopolies do have a high 'spherical frictionless cow` smell. And they are posed here as gospel. So while it might be a bit of an ad hominem to frame someone as a 120 year old it does succinctly point out a problem and hence adds information.
        hypeatei 4mo ago
        > And they are posed here as gospel The same could be said for people who suggest regulation for every problem that comes up, even for problems that were caused by regulation. Maybe we have our blindspots, but the "regulate everything" crowd is much louder and more prevalent on HN than the free market absolutists.
        throwwwll 4mo ago
        Here's another ad-hominem (to another poster), cause you guys just cannot argue in good faith: Spoken like a true American who had long-forgotten nuance exists.
        philipallstar 4mo ago
        Things "having a smell" is not an argument, and they weren't posed as gospel. I've yet to see anyone counter the basic points of that post, because they look pretty solid. Happy if you have a non-vibes based rebuttal.
- Chu4eeno 4mo ago
  Are there any examples of monopolies being (successfully) broken up in Europe? Or do you posit that regulation stop them from forming?
  - raverbashing 4mo ago
    Look into the mechanisms being worked on to create competition in rail operators (which has been opening the markets to competitor rail operators)
  - doikor 4mo ago
    Pre WW2 Europe was full of (state backed) cartels and monopolies. These were dismantled for the most part. A lot of these were international. Just read up on "Cartel capitalism". https://www.cambridge.org/core/journals/enterprise-and-society/article/monopoly-menace-the-rise-and-fall-of-cartel-capitalism-in-western-europe-19181957/762EF05674DAB85AA9FAE07AE1723B37 https://www.cambridge.org/core/journals/enterprise-and-socie... The European Steel and Coal Community (precursor of the EU) was also involved in the effort to stop these. In general this has been something the EU has been involved in since its inception and the best action against monopolies is to not let them form in the first place (why there is so few of them in general in most developed countries. Though that is now slowly changing it seems)
  - podgorniy 4mo ago
    [dead]
- slopinthebag 4mo ago
  No, in fact most monopolies occur in heavily regulated markets, where unregulated markets are virtually always free. Keep in mind that just having a big market share isn’t a monopoly, being able to charge monopoly prices is.
gr__or 4mo ago
Regulations __can__ create monopolies. DMA is a regulation, but it does not have the shortcomings you mentioned.
- Chu4eeno 4mo ago
  DMA seems explicitly written to only target monopolies, though (and seems like a surrender from the EU, since monopolies should be broken up and not get laws codifying their business models IMHO).
  - Zagitta 4mo ago
    Can you imagine the collective screeching, across the White house, HN and Apple reality distortion field, that'd happen if EU attempted to breakup the American monopolies? Electing to not do something impossible and framing it as a surrender is strange to me.
    - axus 4mo ago
      The countries that let Donald Trump's screeching dictate their policies don't fare any better than those who ignore it.
Escapado 4mo ago
My intuition is that this is not necessarily true, but probably often true in practice but perhaps someone more educated on the matter can speak on that. It must also depend on the expensiveness of the regulation in question. Since in tons of areas regulations are absolutely vital so that for example our buildings don’t collapse, our food remains non-toxic and the medicine we buy is not the pharmacological equivalent to russian roulette the goal should then be to optimise the cost performance of regulations.
thibaut_barrere 4mo ago
Unless regulations explicitely incorporate how to handle incumbents & newcomers. One instance of that is MMTIS (multi modal passenger information), which explicitly states innovation and new players as a goal. There are other similar examples.
shaan7 4mo ago
> Corporations lobby the government to implement laws that seem to hurt them but in actuality create an uneven playing field where marketshare becomes available due to the higher implementation cost (nit: I assume you meant "marketshare becomes unavailable") So you mean that regulations that are created based on lobbying by corporations help them become monopolies? Sure, that makes sense. But thats different from a blanket "Regulations create monopolies".
- phyzix5761 4mo ago
  Because the smaller players can't afford to implement the new regulations they lose their marketshare and it now becomes available for the bigger competitors to absorb.
braiamp 4mo ago
> Regulations create monopolies. Even when regulations are aimed at curbing the control of giants, smaller players usually can't afford them and lose market share. This is actually taught as a competitive advantage strategy in business school. Corporations lobby the government to implement laws that seem to hurt them but in actuality create an uneven playing field where marketshare becomes available due to the higher implementation cost. The only way to guarantee a monopoly is to have a total lack of regulation. It's known that every "free" market will tend towards monopoly due the 1% law. Regulations are the only way to actually guarantee free markets because perfect free markets only exists in abstract, not in reality. Sometimes, a free market is the wrong solution and you need a regulated monopoly instead and with identity that's the best solution. Why? Because identity is unique to the individual. A individual must (in theory) only have one identity and with very extreme and usually well documented exceptions, such identity doesn't change. The state is the one that must provide a good way for identity and if smaller countries doesn't have the resources, then big countries should provide for all. Also, it removes incompatibility inter-countries while keeping private interests out. The state should have the sole monopoly on attesting to anyone identity. Because they are the only ones that are not affected by market conditions. This is how countries that have advanced in this topic actually work. If individual states can't reach a common solution, then the collective must do so. The collective failed here because it recommended a private solution rather than mandated a european one. Private sector must not dictate what or how identity is attested, because the private sector has it's profit pursuing agenda, state must evaluate solutions but it's up to the states to run them and implement them. Market solutions are good for several things, this isn't one of them.

podgorniy 4mo ago

Aren't monopolies is what we end up by default if have no regulation at all? And yes, not every regulation destroys monopoly, but regulation is the only thing that could break one.

nba456_ 4mo ago
> Aren't monopolies is what we end up by default if have no regulation at all? No.
- maybewhenthesun 4mo ago
  19th century begs to differ. A better answer would be 'not always'. The proposed regulations forcing everybody to use google or apple are ridiculous and very much the opposite of the kind of regulations we need though...
  - ulbu 4mo ago
    or “sometimes not, until more data arrives”.
Arkhaine_kupo 4mo ago
> Aren't monopolies is what we end up by default if have no regulation at all? No. Monopolies are only inevitable if the goods aren't elastic, if there is a large cost of entry into the market, or if its a market you can create a moat that is unsurmountable. Many markets don't have that even with 0 regulation, but might have second order problems like firms creating unsafe products for example. But in general regulations almost always even unindentedly raise the cost to enter the market. If you make a new regulation that food needs to be safe, then the company needs to pay a safety inspection that a small home-made recipe might not be able to afford (to give a simple example). At the same time, we now have uber large corporations due to non elastic parts of supply chain (like land) or moats that are insurmountable (like access to US capital). In which case, the FCC should break up monopolies as the current market is not catering to end users and consumers but to owners, which is why the Stock market has been in a never ending bull run.
- throwwwll 4mo ago
  [flagged]
  - philipallstar 4mo ago
    > Spoken like a true 120-year who trusts blindly everything he hears online from Rothbard This ad hominem stuff is genuinely worthless.
    - maybewhenthesun 4mo ago
      I don't think so. Because the theories about elastic markets and monopolies do have a high 'spherical frictionless cow` smell. And they are posed here as gospel. So while it might be a bit of an ad hominem to frame someone as a 120 year old it does succinctly point out a problem and hence adds information.
      - hypeatei 4mo ago
        > And they are posed here as gospel The same could be said for people who suggest regulation for every problem that comes up, even for problems that were caused by regulation. Maybe we have our blindspots, but the "regulate everything" crowd is much louder and more prevalent on HN than the free market absolutists.
        throwwwll 4mo ago
        Here's another ad-hominem (to another poster), cause you guys just cannot argue in good faith: Spoken like a true American who had long-forgotten nuance exists.
      - philipallstar 4mo ago
        Things "having a smell" is not an argument, and they weren't posed as gospel. I've yet to see anyone counter the basic points of that post, because they look pretty solid. Happy if you have a non-vibes based rebuttal.
Chu4eeno 4mo ago
Are there any examples of monopolies being (successfully) broken up in Europe? Or do you posit that regulation stop them from forming?
- raverbashing 4mo ago
  Look into the mechanisms being worked on to create competition in rail operators (which has been opening the markets to competitor rail operators)
- doikor 4mo ago
  Pre WW2 Europe was full of (state backed) cartels and monopolies. These were dismantled for the most part. A lot of these were international. Just read up on "Cartel capitalism". https://www.cambridge.org/core/journals/enterprise-and-society/article/monopoly-menace-the-rise-and-fall-of-cartel-capitalism-in-western-europe-19181957/762EF05674DAB85AA9FAE07AE1723B37 https://www.cambridge.org/core/journals/enterprise-and-socie... The European Steel and Coal Community (precursor of the EU) was also involved in the effort to stop these. In general this has been something the EU has been involved in since its inception and the best action against monopolies is to not let them form in the first place (why there is so few of them in general in most developed countries. Though that is now slowly changing it seems)
- podgorniy 4mo ago
  [dead]
slopinthebag 4mo ago
No, in fact most monopolies occur in heavily regulated markets, where unregulated markets are virtually always free. Keep in mind that just having a big market share isn’t a monopoly, being able to charge monopoly prices is.

gr__or 4mo ago

Regulations __can__ create monopolies. DMA is a regulation, but it does not have the shortcomings you mentioned.

Chu4eeno 4mo ago
DMA seems explicitly written to only target monopolies, though (and seems like a surrender from the EU, since monopolies should be broken up and not get laws codifying their business models IMHO).
- Zagitta 4mo ago
  Can you imagine the collective screeching, across the White house, HN and Apple reality distortion field, that'd happen if EU attempted to breakup the American monopolies? Electing to not do something impossible and framing it as a surrender is strange to me.
  - axus 4mo ago
    The countries that let Donald Trump's screeching dictate their policies don't fare any better than those who ignore it.

Escapado 4mo ago

My intuition is that this is not necessarily true, but probably often true in practice but perhaps someone more educated on the matter can speak on that. It must also depend on the expensiveness of the regulation in question. Since in tons of areas regulations are absolutely vital so that for example our buildings don’t collapse, our food remains non-toxic and the medicine we buy is not the pharmacological equivalent to russian roulette the goal should then be to optimise the cost performance of regulations.

thibaut_barrere 4mo ago

Unless regulations explicitely incorporate how to handle incumbents & newcomers. One instance of that is MMTIS (multi modal passenger information), which explicitly states innovation and new players as a goal. There are other similar examples.

shaan7 4mo ago

> Corporations lobby the government to implement laws that seem to hurt them but in actuality create an uneven playing field where marketshare becomes available due to the higher implementation cost (nit: I assume you meant "marketshare becomes unavailable") So you mean that regulations that are created based on lobbying by corporations help them become monopolies? Sure, that makes sense. But thats different from a blanket "Regulations create monopolies".

phyzix5761 4mo ago
Because the smaller players can't afford to implement the new regulations they lose their marketshare and it now becomes available for the bigger competitors to absorb.

braiamp 4mo ago

> Regulations create monopolies. Even when regulations are aimed at curbing the control of giants, smaller players usually can't afford them and lose market share. This is actually taught as a competitive advantage strategy in business school. Corporations lobby the government to implement laws that seem to hurt them but in actuality create an uneven playing field where marketshare becomes available due to the higher implementation cost. The only way to guarantee a monopoly is to have a total lack of regulation. It's known that every "free" market will tend towards monopoly due the 1% law. Regulations are the only way to actually guarantee free markets because perfect free markets only exists in abstract, not in reality. Sometimes, a free market is the wrong solution and you need a regulated monopoly instead and with identity that's the best solution. Why? Because identity is unique to the individual. A individual must (in theory) only have one identity and with very extreme and usually well documented exceptions, such identity doesn't change. The state is the one that must provide a good way for identity and if smaller countries doesn't have the resources, then big countries should provide for all. Also, it removes incompatibility inter-countries while keeping private interests out. The state should have the sole monopoly on attesting to anyone identity. Because they are the only ones that are not affected by market conditions. This is how countries that have advanced in this topic actually work. If individual states can't reach a common solution, then the collective must do so. The collective failed here because it recommended a private solution rather than mandated a european one. Private sector must not dictate what or how identity is attested, because the private sector has it's profit pursuing agenda, state must evaluate solutions but it's up to the states to run them and implement them. Market solutions are good for several things, this isn't one of them.