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"How do we craft regulation such that those companies are more profitable when they do what we want them to do?" Sounds like the U.S. already has such regulati
by Nimi 12y ago
"How do we craft regulation such that those companies are more profitable when they do what we want them to do?"
Sounds like the U.S. already has such regulation - anti-trust regulation. As ChuckMcM noted above, the problem is that Comcast has a monopoly over the last mile. Effective and enforced anti-trust regulations would break up this monopoly into several different competing companies.
BTW, here in Israel, the government apparently has taken the position that services requiring significant infrastructure investment (Internet or cellular networks) are best handled by handing out a limited number of licenses using a bid. We then get an oligopoly where the companies are wildly profitable, until the government has decided we got the infrastructure we wanted, and removes the barrier to entry. Specifically for Internet, we have a duopoly over the last mile "going until the city exchange" to put it in ChuckMcM's terms, then a lot of ISPs taking it from there. IMO, not a bad way to go - we don't pay a lot and get decent Internet everywhere in the country.
- rcthompson 12y agoAnti-trust laws are not ideal, though. They effectively act as thresholds or hard lower limits on allowed competition, but they don't directly address the economies of scale and barriers to entry that push the market toward a monopoly state.
- Nimi 12y agoAgreed. I have been looking now for a while for a rigorous treatment of how to deal with monopoly-related problems (hopefully this would be a summary of the current consensus among economists), are you by chance familiar with one?
- whatevsbro 12y ago> I have been looking now for a while for a rigorous treatment of how to deal with monopoly-related problems http://mises.org/rothbard/mes/chap10a.asp http://mises.org/rothbard/mes/chap10a.asp there are two, and only two, ways to settle what the prices of goods will be. One is the way of the free market, where prices are set voluntarily by each of the participating individuals. In this situation, exchanges are made on terms benefiting all the exchangers. The other way is by violent intervention in the market, the way of hegemony as against contract. Such hegemonic establishment of prices means the outlawing of free exchanges and the institution of exploitation of man by man—for exploitation occurs whenever a coerced exchange is made. If the free-market route—the route of mutual benefit—is adopted, then there can be no other criterion of justice than the free-market price, and this includes alleged “competitive” and “monopoly” prices, as well as the actions of cartels. In the free market, consumers and producers adjust their actions in voluntary cooperation.
- rcthompson 12y agoHaha, no, I'm not. I only have a 1-year undergrad intro econ course plus a mathematics degree and my own intuition. I don't think I've actually read any primary literature in the econ field, only my textbook (and not much of that, either!).
- ChuckMcM 12y agoTrue, the original impetus for the market monoply exclusions that exist today was to insure that someone coming into the market had a reasonable chance of making their money back. This encouraged people like Comcast to bring cable to the city. What has changed is that the Internet which was a 'ride along' on the Telephone and Cable monopolies has become more of a lifeline service. Further it has gone to the point where it supercedes both, since a home with a 1 - 3mbps Internet connection can get both phone and television services over it. This is the message that I'm bringing to the city, which is that Internet pipes have become like roads, essential for the citizens and the proper functioning of the city itself. And given that, lets move the infrastructure into the same place, city owned/maintained raw pipes, company services accessible by those pipes.