> NO organization is suppose to have market power. This is naive wishful thinking. It's popular to create simplistic models to explain basic economic principle

> NO organization is suppose to have market power. This is naive wishful thinking. It's popular to create simplistic models to explain basic economic principles, models that assume perfect markets. However, reality does not (have to) comply to such models. Analytically, the principle of economies of scale (1) strongly favors, through market mechanisms, the development of large entities. A large corporation, dividing its marketing and R&D costs over a large market share, has significantly lower costs than upstart small competitors. This enables it to out compete smaller upstarts, and serves as a natural barrier of entry to a specific market. Upstarts are either relegated to a small niche, or, having stumbled upon an entirely new market with no dominant players yet, grow to be a large dominating player in their respective market. Empirically, every single market is dominated by a handful of large actors. This pattern is observed in local markets, national markets and global markets. Quick example for the HN crowd, the cloud hosting market. Amazon, Microsoft, Google, Rackspace account for more than half the market share (2). In a young market, with little regulation, where a lot of people on this site have plenty of technological skills to engineer an IAAS service from scratch. But few have the business skill, capital and timing to actually enter the market successfully. (1) http://en.wikipedia.org/wiki/Economies_of_scale http://en.wikipedia.org/wiki/Economies_of_scale (2) http://www.businessinsider.com/amazon-web-services-market-share-2014-6 http://www.businessinsider.com/amazon-web-services-market-sh...