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Anonymous

monopolies...
    #1797722 - 08/10/03 11:20 AM (13 years, 4 months ago)

there's been some talk as of late about how in capitalism, a problem of competition is that it can give rise to monopolies, which exploit the market and drive up prices and drive down quality.

i don't buy it. if there is a company that is charging alot for a shitty product, how does the fact that it's the only company charging alot for a shitty product make it less likely that someone else will come along and make an improved version of the product or sell it for less?

if we live on an island, and i'm the only guy making lemonade, and charging $5.00 a glass for it, what's to keep someone else from making lemonade and charging $2.00 a glass for it? it's not as though i'm forcing anyone to not make lemonade and compete with me...


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OfflinePhred
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Re: monopolies... [Re: ]
    #1797770 - 08/10/03 11:47 AM (13 years, 4 months ago)

The Myth of Monopolies is one of the most common "objections" to Laissez-faire Capitalism, and one of the easiest to debunk.

Your reasoning is correct. Coercive monopolies can exist only with government intervention.

In a free market, where any competitor can challenge an existing provider of a product or a service, the only way a monopoly can be maintained for any length of time is for the provider of the good or service to deliver consistently the best possible product at the lowest possible price with the highest possible standards of quality, delivery time, support, etc. This is an incredibly tough set of circumstances to fulfill.

If any company were ever to be able to deliver all those factors, who is harmed? The consumers are getting the best possible deal.

pinky


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InvisibleAutonomous
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Registered: 05/10/02
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Re: monopolies... [Re: ]
    #1797845 - 08/10/03 12:31 PM (13 years, 4 months ago)

I would like someone to please give an example of any true MONOpoly (no Fidel, Microsoft is NOT a monopoly) that has lasted more than the length of time a patent is in effect that was NOT aided or abetted by the government in some way.


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"In religion and politics people's beliefs and convictions are in almost every case gotten at second-hand, and without examination."
-- Mark Twain


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OfflinePhred
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Re: monopolies... [Re: Autonomous]
    #1797857 - 08/10/03 12:39 PM (13 years, 4 months ago)

Don't hold your breath.


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OfflineGernBlanston
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Registered: 05/28/03
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Re: monopolies... [Re: Phred]
    #1797988 - 08/10/03 01:27 PM (13 years, 4 months ago)

Quote:

if we live on an island, and i'm the only guy making lemonade, and charging $5.00 a glass for it, what's to keep someone else from making lemonade and charging $2.00 a glass for it? it's not as though i'm forcing anyone to not make lemonade and compete with me...




There are a couple of things that could keep these $2 lemonade people away.

1 - You have already used most of the lemon and sugar supply on your island. The remaining lemon orchard is under specific contract with you, since you buy so many lemons from them, to sell you a guaranteed large percentage of their lemons at a guaranteed low price. So anyone else looking for lemons on this island has a hard time finding any to buy, and pays 2x as much for their lemons as you do.

2 - After a period of prolonged success do to your lemon arrangement, you decide to purchase controlling interest in the lemon orchard, dictating who you sell lemons to in the first place. You decide not to sell lemons to any businesses at all.

3 - Since you have been such a great economic force on the island, bringing business to the lemon farmers and the sugar importers and providing people with a steady supply of a delicious product, the local government believes that you are 'good for the economy'. You ask them for tax breaks and get them. You get so popular, through campaign contributions, sponsoring fundraisers for your friends in government, and allowing your govt. buddies to have free lemonade whenever they like, that eventually they legislate regulations on the lemonade industry on your island. Of course, you benefit from all of these regulations, whereas any potential competitors (if you still have any after cornering the market in lemons, and undercutting prices) will be forced to comply with new regulatory procedures that will not really help their business grow, as yours continues to hold dominant market share.

4 - Hell... after a few years of this, all of your competitors will simply vanish. You will have "Wal-Mart-ized" them. Now, since you are the only lemonade vendor on the island, and people have come to rely on your lemonade to relieve their sweaty existances, you can begin charging $7 for your lemonade instead of the $5 that you used to. People may complain a bit, but they need the lemonade, so they'll pay the $7.

Is this the definiton of a monopoly? Not exactly. But I think you might need to refine your question. It has been proven time and time again (Sony, BMG, United Artists, Virgin, and the RIAA working together to freeze CD prices, for example) that big businesses reach a saturation point, and through the workings of the system, cement a place for themselves in that system... There is pretty much nothing a small retailer can do against Wal-Mart. Nothing. So while these "new-monopolies" may not consist of a single company anymore (usually), the effect is the same.


--------------------
There is no flag large enough to cover the shame of killing innocent people.
  --  Howard Zinn


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OfflinePhred
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Re: monopolies... [Re: GernBlanston]
    #1798081 - 08/10/03 02:12 PM (13 years, 4 months ago)

The example you were replying to was not mine, but mushmaster's. However, I'll comment on your points anyway:

1 - You have already used most of the lemon and sugar supply on your island. The remaining lemon orchard is under specific contract with you, since you buy so many lemons from them, to sell you a guaranteed large percentage of their lemons at a guaranteed low price. So anyone else looking for lemons on this island has a hard time finding any to buy, and pays 2x as much for their lemons as you do.

No one is preventing anyone from starting their own lemon orchard and supplying my potential competitor.

No one is preventing anyone from importing lemons.

No one is preventing anyone from selling orange-aid or lime-aid or iced tea which serve the same purpose as lemonade and may in fact turn out to be more popular.

2 - After a period of prolonged success do to your lemon arrangement, you decide to purchase controlling interest in the lemon orchard, dictating who you sell lemons to in the first place. You decide not to sell lemons to any businesses at all.

The complete lack of available lemons on the island now makes it even more enticing for a competitor to start his own orchard or to start importing lemons.

3 - Since you have been such a great economic force on the island, bringing business to the lemon farmers and the sugar importers and providing people with a steady supply of a delicious product, the local government believes that you are 'good for the economy'. You ask them for tax breaks and get them... etc. etc.

Which is my point exactly. Coercive monopolies cannot exist for any length of time without government intervention.

4 - Hell... after a few years of this, all of your competitors will simply vanish. You will have "Wal-Mart-ized" them.

See above. Government intervention.

Is this the definiton of a monopoly? Not exactly.

Then why spend all that time addressing something not being discussed, especially if you are going to drag government into it?

But I think you might need to refine your question. It has been proven time and time again (Sony, BMG, United Artists, Virgin, and the RIAA working together to freeze CD prices, for example) that big businesses reach a saturation point, and through the workings of the system, cement a place for themselves in that system...

You are describing the practices of a cartel, not a monopoly. It has also been proven time and time again that cartels inevitably disintegrate.

There is pretty much nothing a small retailer can do against Wal-Mart. Nothing.

Then why are there still smaller retailers? When you want to buy clothes, is WalMart your only choice? Nope. When was the last time you were in a shopping mall? There is almost nothing you can buy in WalMart that you can't buy in other smaller stores as well, from kitchen supplies to CDs to vitamins to televisions.

So while these "new-monopolies" may not consist of a single company anymore (usually), the effect is the same.

Again, you are describing a "cartel", not a monopoly. And what "effect" are you describing? Collusion by the members of the cartel to raise prices? That sure as hell hasn't occurred in the department store area -- quite the reverse.

I am more familiar with the department stores in Canada than I am with those in the States, but in Ottawa, for example, if I am looking for cheap stuff, I can choose between WalMart, Kmart, Woolworth's, Sears, Hudson's Bay, Giant Tiger and probably a few more I have forgotten about. The existence of WalMart hasn't meant that all of a sudden I have to pay more for my cheap stuff -- I now pay less. WalMart's competitors have dropped their prices in order to retain market share, so I as a consumer have benefited from the entry of WalMart into the Canadian market.

pinky


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Offlineololiuqui
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Re: monopolies... [Re: Phred]
    #1798098 - 08/10/03 02:25 PM (13 years, 4 months ago)

the psychedelic godfathers had a monopoly...


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InvisibleXlea321
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Re: monopolies... [Re: Autonomous]
    #1798129 - 08/10/03 02:40 PM (13 years, 4 months ago)

I would like someone to please give an example of any true MONOpoly

I don't think it needs to be 100% by one company. 3-4 major supermarkets can band together and agree to keep prices inflated and keep ripping off the consumer. Happens a lot in the UK.


--------------------
Don't worry, B. Caapi


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InvisibleAutonomous
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Re: monopolies... [Re: Xlea321]
    #1798139 - 08/10/03 02:45 PM (13 years, 4 months ago)

So you can't provide an example? Just one would help, I am not asserting that such a situation has never existed, I would just like a verifiable example.


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"In religion and politics people's beliefs and convictions are in almost every case gotten at second-hand, and without examination."
-- Mark Twain


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InvisibleXlea321
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Re: monopolies... [Re: Autonomous]
    #1798156 - 08/10/03 02:52 PM (13 years, 4 months ago)

Just one? In the UK? The privatised water supply comes to mind.

In fact monopoly control of the water supply in many third world countries is a huge problem.


--------------------
Don't worry, B. Caapi


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OfflineyelimS
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Re: monopolies... [Re: Autonomous]
    #1798171 - 08/10/03 02:58 PM (13 years, 4 months ago)

haha, monopoly, that's a fun word. i wonder what a monostereo is.


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InvisibleAutonomous
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Re: monopolies... [Re: Xlea321]
    #1798177 - 08/10/03 03:01 PM (13 years, 4 months ago)

Quote:

Alex123 said:
Just one? In the UK? The privatised water supply comes to mind.




Did you state privatised, as in once owned by the government? Something the government had a monopoly on and then turned this monopoly over to another entity's control? Sorry, this does not fit the qualifications which I gave earlier.


--------------------
"In religion and politics people's beliefs and convictions are in almost every case gotten at second-hand, and without examination."
-- Mark Twain


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OfflineyelimS
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Re: monopolies... [Re: Autonomous]
    #1798182 - 08/10/03 03:04 PM (13 years, 4 months ago)

i think norway's two main airline companies has the same prices. or at least used to.


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InvisibleXlea321
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Re: monopolies... [Re: Autonomous]
    #1798191 - 08/10/03 03:09 PM (13 years, 4 months ago)

Something the government had a monopoly on and then turned this monopoly over to another entity's control?

How do you even compare the two? The government isn't running the nations water supply for a profit, a corporations sole goal is to earn profit.

The obvious difference is the government wouldn't increase the price of water by 400% as the privatised company that got hold of the Bolivian water system did.


--------------------
Don't worry, B. Caapi


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Anonymous

Re: monopolies... [Re: Xlea321]
    #1798198 - 08/10/03 03:14 PM (13 years, 4 months ago)

well shit alex... let me tell you what i'd do if i was a bolivian...

buy up some water filtration equipment, perhaps with capital raised from cocaine smuggling...

then get all the villigers to pee in a drum i'd haul around. at the end of the day, i'd filter that piss. whamo! clean drinking water. i'd undercut the competition and be the freakin' king of the place.

you see that man? ingenuity... that's what this is about...


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InvisibleXlea321
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Re: monopolies... [Re: ]
    #1798222 - 08/10/03 03:24 PM (13 years, 4 months ago)

He jests at scars that never felt a wound.


--------------------
Don't worry, B. Caapi


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InvisibleAutonomous
MysteriousStranger

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Re: monopolies... [Re: Xlea321]
    #1798237 - 08/10/03 03:32 PM (13 years, 4 months ago)

Quote:

Alex123 said:
Something the government had a monopoly on and then turned this monopoly over to another entity's control?

How do you even compare the two? The government isn't running the nations water supply for a profit, a corporations sole goal is to earn profit.

The obvious difference is the government wouldn't increase the price of water by 400% as the privatised company that got hold of the Bolivian water system did.




Who established the monopoly? My understanding by the use of the term privatised implies that the government had owned and most likely established the monopoly. In other words, I would consider this as falling under the terms of aided or abetted. Here is my original request:

I would like someone to please give an example of any true MONOpoly (no Fidel, Microsoft is NOT a monopoly) that has lasted more than the length of time a patent is in effect that was NOT aided or abetted by the government in some way.

I should also like to add that anything which has come into being or maintained itself through criminal or violent acts would not qualify as becoming a monopoly via laissez faire capitalist means. Can you or anyone else provide a verifiable instance of such a monopoly?


--------------------
"In religion and politics people's beliefs and convictions are in almost every case gotten at second-hand, and without examination."
-- Mark Twain


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InvisibleXlea321
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Re: monopolies... [Re: Autonomous]
    #1798246 - 08/10/03 03:38 PM (13 years, 4 months ago)

I don't understand your definition of a monopoly. A monopoly is by definition a situation in which a single company owns all or nearly all of the market for a given type of product or service.

Water corporations are clearly an example of this.


--------------------
Don't worry, B. Caapi


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OfflineGernBlanston
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Re: monopolies... [Re: ]
    #1798251 - 08/10/03 03:40 PM (13 years, 4 months ago)

*looks up*
Was there a point to that?

Anyhoo...

No one is preventing anyone from starting their own lemon orchard and supplying my potential competitor.
No one is preventing anyone from importing lemons.
No one is preventing anyone from selling orange-aid or lime-aid or iced tea which serve the same purpose as lemonade and may in fact turn out to be more popular.


Indeed; but if you believe that being forced to import lemons, or to start your own growing operation is going to allow you to cultivate lemons at a lower price, thus allowing you to competitively sell lemonade at a lower price, then your logic has failed you.

As an intellectual exercise, this is interesting and all. But there are those (here and elsewhere) who believe that capitalism works at all levels. The freedom of the consumer outweighs the potential downfalls of the consolidation of corporate power. Capitalism works if the government does not get involved. Blah blah blah.

If anyone truly believes that corporate society exists in a beautiful, shiny, and purely theoretical plane, then I actually feel a bit sorry for you. If you think that government doesn't get involved in corporate affairs, to the mutual benefit of both parties, then you are just wrong.

Which is my point exactly. Coercive monopolies cannot exist for any length of time without government intervention.

Exactly. There is governement intervention, ergo, coercive monopolies do exist.

Then why are there still smaller retailers? When you want to buy clothes, is WalMart your only choice? Nope. When was the last time you were in a shopping mall? There is almost nothing you can buy in WalMart that you can't buy in other smaller stores as well, from kitchen supplies to CDs to vitamins to televisions.

I think that by "smaller retailers", you believe I am referring to The Gap, and Barnes and Noble, and Home Depot. Sure - I can still go to any of those places and get what I need at cometitive prices, but that's not what I'm talking about.

When Wal-Mart opened a Supercenter in my town 23 months ago, there was a Home Depot in town already. That was the only retail Super-Box in town. In those 23 months, my town of about 18,000 people has lost 67 businesses. Small clothing retailers, camera shops, film developers, small electronics, office supply, hardware stores, sporting goods stores, a candy store, tire shops... all phases of business. All 67 of these stores were locally owned. Upon losing these stores, the community was then ripe for the inclusion of a Target, Lowes, Sam's Club, and a handful of other smaller (but still gigantic) chains.

THAT's what I meant by the Wal-Mart comment.

And while a cartel is not technically a monopoly, the end result is the same. We pay the prices they set; we buy the products they offer for sale. And when their toe-hold on an area is set; when the competition is driven out, then that's when they jack the prices back up, lower the supply, and force us to play their game. That's a functional monopoly if I've ever heard of one.


--------------------
There is no flag large enough to cover the shame of killing innocent people.
  --  Howard Zinn


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InvisibleXlea321
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Re: monopolies... [Re: GernBlanston]
    #1798254 - 08/10/03 03:42 PM (13 years, 4 months ago)

*looks up*
Was there a point to that?


Nice one Gern!

:lol:

And while a cartel is not technically a monopoly, the end result is the same. We pay the prices they set; we buy the products they offer for sale. And when their toe-hold on an area is set; when the competition is driven out, then that's when they jack the prices back up, lower the supply, and force us to play their game. That's a functional monopoly if I've ever heard of one.

Amen.


--------------------
Don't worry, B. Caapi


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