5 ms·

>>Giving away delivery for free is a form of predatory pricing<< This line of reasoning always amused me. Free = predatory? Can someone explain how one arriv

by liber8 13y ago

>>Giving away delivery for free is a form of predatory pricing<< This line of reasoning always amused me. Free = predatory? Can someone explain how one arrives at this logic? If the thinking is that "free" leads to "monopoly" which then leads to dramatically increased pricing once all competition is eliminated, this has absolutely, empirically and historically, been shown to be false. It simply never happens. Or more accurately, if/when it has been attempted, this practice has swiftly been defeated by competition. Edit: An afterthought: If free = predatory pricing, why do we allow charities to distribute free shelter, goods, and food? Surely these institutions are displacing some sales that would otherwise take place, thus negatively impacting those businesses that would otherwise have profited from those sales?

rtpg 13y ago
>If the thinking is that "free" leads to "monopoly" which then leads to dramatically increased pricing once all competition is eliminated, this has absolutely, empirically and historically, been shown to be false. It simply never happens. Or more accurately, if/when it has been attempted, this practice has swiftly been defeated by competition. Unlimited data plans in the US (or almost everywhere else) is where this has happened
- liber8 13y ago
  I don't follow. In the US, we went from ridiculously expensive per minute plans 10 years ago to unlimited, nationwide calling for a pretty low flat-fee per month. This seems to be the opposite of predatory pricing... US Telecom in general is an interesting example because it's one of the few industries that typically do soak consumers, because of what essentially amount to government enforced monopolies.
  - r00fus 13y ago
    Yes, because we broke up AT&T. Before that, AT&T was pushing that you had to not only buy lines, but the phones from them as well. Perhaps this was before your time, but there's a reason that Cap'n Crunch and blue box pirates like Jobs/Wozniak had appeal - the alternative was monopoly pricing.
    - liber8 13y ago
      ...right, see my above comment: >>US Telecom in general is an interesting example because it's one of the few industries that typically do soak consumers, because of what essentially amount to government enforced monopolies.<< AT&T was only able to retain its monopoly because the government helped it enforce that monopoly by prohibiting competitors from entering the market. See the Kingsbury Commitment. The only way monopolies succeed is if government force prevents markets from functioning.
      - consonants 13y ago
        That's a cool claim, do you have a source that isn't from mises.org? Tell me more about functioning markets and how they can only be prevented by government force.
        liber8 13y ago
        Yes, I provided it in the above comment. Go read about the Kingsbury Commitment, the The Willis-Graham Act, the history of the ICC and the FCC. In sum, the US granted AT&T a monopoly in exchange for being able to set the rates AT&T could charge (guess how beneficial that ended up being for consumers). I don't know why people think the historical lack of monopolies (without government backing) is some right-wing nut-job theory. Not even the robber-barons wielded monopolies that allowed them to engage in "predatory pricing" or the other feared ills of monopolies. Go read about Vanderbilt or Getty or Carnegie. In each of their industries, consumers saw prices fall dramatically, even after each consolidated control over major portions of their respective markets. The fear that they would raise prices dramatically after acquiring their near-monopolies never materialized. Edit: >>Tell me more about functioning markets and how they can only be prevented by government force<< Sorry, I misread your snark. I never said functioning markets can only be prevented by government force (whatever that even means). I'm saying that throughout history, you do not get monopolies that harm consumers unless the government backs the monopoly.
nraynaud 13y ago
too bad since in France we have seen this exact scenario happen 10 years ago with radio networks (they destroyed most independent local radios). With the real hard irony that the main network who killed everybody (NRJ) used to be a pirate radio from before the free radio, and a real offspring of the radio liberalization in 1986. Now you mainly have 2 kinds of radios: non-profit and big networks. Charities/non-profits are heavily regulated in France, and they simply can't get enough "capital" to try this kind of scheme. You need so much capital (basically you're trading capital for market share, you'd better be the biggest when you start the race) that it's mostly public companies who can do that. That is also why Europe doesn't like state owned companies on free market, having the state budget as "available" capital, they can undercut everybody without endangering their lives (that's where the left/right doctrine kicks in).

by liber8 13y ago

rtpg 13y ago

>If the thinking is that "free" leads to "monopoly" which then leads to dramatically increased pricing once all competition is eliminated, this has absolutely, empirically and historically, been shown to be false. It simply never happens. Or more accurately, if/when it has been attempted, this practice has swiftly been defeated by competition. Unlimited data plans in the US (or almost everywhere else) is where this has happened

liber8 13y ago
I don't follow. In the US, we went from ridiculously expensive per minute plans 10 years ago to unlimited, nationwide calling for a pretty low flat-fee per month. This seems to be the opposite of predatory pricing... US Telecom in general is an interesting example because it's one of the few industries that typically do soak consumers, because of what essentially amount to government enforced monopolies.
- r00fus 13y ago
  Yes, because we broke up AT&T. Before that, AT&T was pushing that you had to not only buy lines, but the phones from them as well. Perhaps this was before your time, but there's a reason that Cap'n Crunch and blue box pirates like Jobs/Wozniak had appeal - the alternative was monopoly pricing.
  - liber8 13y ago
    ...right, see my above comment: >>US Telecom in general is an interesting example because it's one of the few industries that typically do soak consumers, because of what essentially amount to government enforced monopolies.<< AT&T was only able to retain its monopoly because the government helped it enforce that monopoly by prohibiting competitors from entering the market. See the Kingsbury Commitment. The only way monopolies succeed is if government force prevents markets from functioning.
    - consonants 13y ago
      That's a cool claim, do you have a source that isn't from mises.org? Tell me more about functioning markets and how they can only be prevented by government force.
      - liber8 13y ago
        Yes, I provided it in the above comment. Go read about the Kingsbury Commitment, the The Willis-Graham Act, the history of the ICC and the FCC. In sum, the US granted AT&T a monopoly in exchange for being able to set the rates AT&T could charge (guess how beneficial that ended up being for consumers). I don't know why people think the historical lack of monopolies (without government backing) is some right-wing nut-job theory. Not even the robber-barons wielded monopolies that allowed them to engage in "predatory pricing" or the other feared ills of monopolies. Go read about Vanderbilt or Getty or Carnegie. In each of their industries, consumers saw prices fall dramatically, even after each consolidated control over major portions of their respective markets. The fear that they would raise prices dramatically after acquiring their near-monopolies never materialized. Edit: >>Tell me more about functioning markets and how they can only be prevented by government force<< Sorry, I misread your snark. I never said functioning markets can only be prevented by government force (whatever that even means). I'm saying that throughout history, you do not get monopolies that harm consumers unless the government backs the monopoly.

nraynaud 13y ago

too bad since in France we have seen this exact scenario happen 10 years ago with radio networks (they destroyed most independent local radios). With the real hard irony that the main network who killed everybody (NRJ) used to be a pirate radio from before the free radio, and a real offspring of the radio liberalization in 1986. Now you mainly have 2 kinds of radios: non-profit and big networks. Charities/non-profits are heavily regulated in France, and they simply can't get enough "capital" to try this kind of scheme. You need so much capital (basically you're trading capital for market share, you'd better be the biggest when you start the race) that it's mostly public companies who can do that. That is also why Europe doesn't like state owned companies on free market, having the state budget as "available" capital, they can undercut everybody without endangering their lives (that's where the left/right doctrine kicks in).