Antitrust Law - Needed or Not?

[Slutter McGee]

You are very easily convinced of the existence of these things, because you don't know the economics that tells us they are virtually impossible.

A simple game theory model will show you that its possible for a cartel to hold under certain circumstances. Just play a Cournot game with a grim trigger strategy. Give monopoly profits divided by 4 as cartel profits and discount it into the future, then find the incentive to cheat by looking the full monopoly profits minus episilon for one period and assume they are punished by prices to nash equillibrium level for all future periods. Then set up an inequality and find what your discount factor is must be for the cartel to hold.

I don't know, Slutter. Bottom line: I have never had any problems buying lycine. Of course, I've never bought lycine (I don't think), but I don't think that anyone who has has ever had any problems either.

You probably haven't bought lycine because I obviously misspelled it. It is lysine, and that I would virtually guarantee you have bought it. Ever bought a softdrink? Lysine is an additive. and used in tons of product. But it is an intermediate good. You thought nothing of paying an extra ten cents for your coke, but neither did the millions of other people. It caused a lot of issues, but its damage was spread out into tons of smaller costs, which is one reason it lasted. Cartels don't actually jack up to monopoly prices. They would get caught that way.

I have bought vitamins, and I have never had any problems buying vitamins. I have never felt like the price I paid was a rip-off.

The prices of vitamins more than doubled under the cartel that lasted through the 90's. That being said, do you like steak or chicken. The market for vitamins is a lot bigger than going to wall greens and buying a few vitamins. That cartel drove up the prices of all kinds of other goods, and a large part of that was hidden because vitamins are also an intermediate good.

I seriously don't know what else to say to you. I seriously don't know how you can say that cartels can't exist when we have 140 years of evidence that they can. They may not be able to last forever, but they can stay stable long enough to do some serious damage to the consumer.

Slutter McGee

[Mr Tansill]

The reason the electrical industry is how it is, is because the government mandates that it be that way. Then people, like you, look at how it is and say "Look, you ignorant free-marketeers, we need the government to micromanage this industry because that's the only way the system, as it is, could possibly function!" And yeah, that's true to an extent; key words being: as it is!

Do you see how this is totally circular reasoning? Government made this a monopoly system, so we need government to make this a monopoly system. How does that make any sense?

It was entrepreneurs that created the electrical distribution systems. Then governments took over and made them into crony monopolies and we got 100 years of stagnation. How is that desirable? It's not. It's lame. It's junk. Let's give the industry back to the entrepreneurs and let's see some disruption!

So I know this doesn't happen much on the internet, but I agree with some of your theme here. Yes, government mandates that electricity be a certain way. Yes, the reasoning you outline above is circular. That said, can you describe a system in which there is free and unlimited competition in the electricity market?

If I was a company that wanted to run electric cable through a city, I have the right to do so - same as any other company because we're all equal, right? Now, multiply that by N, or any other large integer - you see where this is going? A market like this quickly gets crowded with multiple competing electrical distribution lines that run rampant all over town - hardly a desirable outcome for a city to have, but one they really can't prevent right? I mean, not without regulating the market to some degree...the same is the case in the internet. We all share the same basic infrastructure. No one company gets to be the gate-keeper to certain series of 0s and 1s over any other.

I get your theme, I really do. I am looking at the system as it is and not as it should be. Right? In an idealistic sense, I agree with you absolutely. The internet should be free, open, unhindered, and left alone to the maximum extent. In actuality, however, under our current system (as things are), we have powerful corporations and other entities which engage in lobbying and the drafting and creation of laws and practices which act to undermine their competition (which - news flash - having cheaper prices isn't the only way to accomplish that novel task...). Owning the market is a wonderful way to exert control, and it is the desire of every company no matter what the product might be, so in a sense, I really don't blame them - survival of the fittest and all...

"Gee Bob, we seem to be losing a lot of TV subscribers to Netflix"..."Hmmm, maybe if we restrict the speed at which the data is delivered, it will become a less desirable experience, and consumers will flow back to watching television." "Good idea...draft it, and have it on my desk by the morning..."

Look at Apple as an example. They have a wonderful App store don't they? Do you think they're going to allow you or any other entity to sell apps in their market without taking a cut? Do you think they'll allow apps that don't toe their corporate line? No way, not in this universe. And why should they? It is their market - they built it, they own it, and they can do what they want with it. In the case of the infrastructure of the internet, however, it doesn't belong to Comcast, NBC, Verizon, or AT&T - it belongs to the US taxpayer for this simple reason: it cannot exist without the use of eminent domain, and therefore, it must meet the requirements set forth by the use of that legal framework - namely, it can only be done for public benefit, and expressly not the advantage of a private corporation.

[Lucille]

So, Lucille, you are now saying that you disagree with Denninger's nonsensical statement(s), is that correct?

You mean his numbers? I don't recall agreeing with them in the first place. He went into detail about it in his book, but I haven't read it. I assume even if antitrust laws were applied to the MedIC, prices would fall but then, government being what it is and doing what it does, would $#@! it up again.

I think Denninger is going to war with the army he has, so to speak.

For the record, I'm not a proponent. As with everything, I would prefer government get out of it completely. I also think Ron had far better solutions.

You seem annoyed. Sorry if I derailed the thread focusing on the medical industry. I just thought it was important to point out that antitrust laws are not applied where they might help actual people rather than industries.



Chapter XVI (Page 172): https://mises.org/sites/default/file...0Machine_2.pdf

(BIRM)

[helmuth_hubener]

For the record, I'm not a proponent. As with everything, I would prefer government get out of it completely. I also think Ron had far better solutions.

Agreed!

You seem annoyed.

Not at all. I just didn't realize that you were posting, without comment, a statement that you disagreed with.

I'm glad we can both join in disagreement with Mr. Denninger.

[Vanguard101]

No.

Government makes it far more likely that a monopoly will exist, but it isn't the one and only way it can happen.

This is 100 percent false

[kcchiefs6465]

This is 100 percent false

That makes no sense.

If the government does not make it far more likely that a monopoly will exist, then it cannot be the one and only way it can happen.

[NorthCarolinaLiberty]

I always see an entire aisle with many, many different brands of vitamins available, and multiple choices even for minor specialty vitamins, like Vitamin A or nursing mother vitamins.

The prices of vitamins more than doubled under the cartel that lasted through the 90's. That being said, do you like steak or chicken. The market for vitamins is a lot bigger than going to wall greens and buying a few vitamins. That cartel drove up the prices of all kinds of other goods, and a large part of that was hidden because vitamins are also an intermediate good.

Yes, those vitamins were used in a lot of other goods, but consider the type of goods. The companies involved were all pharmaceutical companies. One probably controlled about half the market, but they hardly had the market cornered as a group.

Pharmaceutical company vitamins are, in my consumer opinion, often of lower quality.* Those are also likely lower grade items containing those vitamins.

There were (and are) still a lot of other choices for vitamins and other products. Top quality vitamins. If these cartel vitamins and products were rising at some astronomical rate, then the consumer had the option of buying something else. Did the consumer have an interest in doing this? Consumers don't often have the inclination. It is just laziness, which usually results in more government.

The so-called vitamin cartel issue easily had a market solution. If only people had paid attention.

I know next to nothing about anti-trust, but I might guess that other products/industries might be similar to this. Could be wrong, but I'd like to see examples.



* German based pharmaceutical Schwabe is an exception to this. They have subsidiaries that do make some high quality products.

[osan]

That's the root, nay, the entirety of our disagreement from beginning to end, top to bottom. I believe in letting people be free to proceed as they wish.

You do not.

More nonsense. Once again you assert with no clear reasoning for support.

You believe in setting up a monopoly to... protect you from monopolies.

Of course, because you said so. Please.

A free market does not mean a free-for-all, unless chaos and tyranny are your desires. Just as "anarchy" does not mean "no rules", "free market" similarly means the same.

If left to their own devices, some people run amok and most of the rest tend to be content to let them. This is demonstrated to us every minute of every day. Our history is literally clogged with examples of this. Regarding that, we all have a choice. Either we adopt some very basic rules for individual/group comportment or we let the fur fly any which way it might.

If we have rules, then we must have a mechanism for enforcement or there is no point in having them. That is not "aggression" just as an act of self defense against a mugger is not. Properly administered, it is a purely reactive mechanism which responds to the violations by one against the rights of another. That people have corrupted this idea on a worldwide basis speaks not to the notion itself, but rather to human habit.

In any event, this is all off the original point. I asserted that antitrust law was, at best, superfluous because we have tort law that can do precisely the same things. You then went off on some weird tangent about competitive markets, on which I called you out, and to that you responded with more nonsense.

This exchange, having run most pointlessly as it has, is now done as far as I am concerned. Hold any opinion you wish. I do not care a whit.

[helmuth_hubener]

Hey, no worries, osan! I don't know why you've decided you hate me, but it's not mutual!

"Free market" really does mean free for all! The most important freedom, as far as Helmuth is concerned, it the freedom to do things that Helmuth doesn't like. The most important freedom, as far as osan is concerned, is the freedom to do things osan doesn't like. Everyone is all for the freedom to do things they like! It's whether they will stand up for the freedom to do things they hate that's the true litmus test of whether they are a true freedom-lover or not.

One cannot apply tort law to actions which are not justly considered torts. Erecting "artificial barriers to entry" seems to me to be one such action. Not a tort. Not legally actionable. I asked you to define more precisely what you meant by "artificial erection of barriers for entry into markets," since it's conceivable you were thinking of some actions which actually would be torts, which I simply had failed to imagine. This was your response:

"Microsoft is a great example of a long-standing policy of making it nearly impossible to successfully market software they deem to be competing with their own."

Now this still does not define a specific action. Clarity, osan! Clarity should be our watchword! I have befuddled you by "going off on tangents" from your perspective, and I apologize. And this is where you have befuddled me. I have no way of knowing what action(s) of Microsoft you are referring to. There's a lot of history there, and what's more, a lot of competing versions of history. Could you give just a single, clear, defined, described action which I can understand which, to you, would constitute an "artificial erection of a barrier for entry into a market" which you think should be actionable as a tort?

Then we can talk about that.

[Slutter McGee]

"Free market" really does mean free for all! The most important freedom, as far as Helmuth is concerned, it the freedom to do things that Helmuth doesn't like. The most important freedom, as far as osan is concerned, is the freedom to do things osan doesn't like. Everyone is all for the freedom to do things they like! It's whether they will stand up for the freedom to do things they hate that's the true litmus test of whether they are a true freedom-lover or not.

This statement in no way has any $#@!ing thing to do with antitrust law.

Slutter McGee

EDIT: I just think I am pissed because I have responded specifically to everything you have said. Specific examples. Evidence. Theory. Etc. but as soon as I challenge or answer you, instead of looking it up, studying and challenging back, you just ignore everything said and repeat the same goddamn thing over again.

[Bryan]

Without reading everything here...

Certainly it can be problematic for one company to gain a monopoly on something but that's also not a guarantee it will "do bad things". In a truly free society there would not be antitrust laws, but that does not mean that its people have to be OK with all companies. The free market does allow for boycotts against a company if they are seen to be engaged in business practices they do not agree with. This is superior to a government solution since the market decides. Education is key, but in many cases there can be added safeguards put in place by other companies. For example, retails can set and publish their own boycott criteria and refuse to carry some companies products, consumers who like the boycott criteria would appreciate that service and shop there knowing they don't have to worry they are supporting something that is harmful.

When the government sets antitrust law the exact terms and application of the law can and will get twisted to favor the politically connected.

That said, this solution won't work well for us now since our system favors corporations and drives their growth at the expense of being self-supporting. The cancer needs to be completed rooted out, starting with the IRS.

[osan]

Hey, no worries, osan! I don't know why you've decided you hate me, but it's not mutual!

Stop putting words in my mouth.

Your approach to responding to me is strident and obnoxious. Adopt a more adult tone and we will be able to have exchanges of a more civil nature. Act like an ass and I will let you know about it. I don't give people $#@! unless they behave in a manner deserving of it. Take from that what you will.[/QUOTE]

[osan]

Without reading everything here...

Certainly it can be problematic for one company to gain a monopoly on something but that's also not a guarantee it will "do bad things".

Depends on the definition of "bad". In microeconomics it is a well know fact that monopolies will always produce less of a given product than the market demands. It is something of a counterintuitive reasoning behind it and I do not recall the details at this moment, but it is nevertheless a fact. When determining the volume of production, businesses use certain calculations. For monopolies the results are of necessity different from those of other sectors where competition exists. This is good for the monpoly in question, but is presumably bad for the market and does, in point of fact, render that particular market unfree in some manner and degree.

ETA:

I cobbled up the following chart to illustrate the monopolists interest v. that of the market under the conditions of imperfect competition that monopolies carry as part of their fundamental microeconomic nature.

[sorry, for some reason neither the jpg or png file will show, despite sourcing from Flickr. Any ideas??]

https://www.flickr.com/photos/82012878@N00/16064010103/

Direct your attention to the values of x(sub m), x*, p(sub m), and p*. x* and p* are the optimal production and cost points where the marginal cost and marginal price equal each other. These are the values that a rationally self-interested firm will use in producing and pricing their goods. x(sub m) and p(sub m) are the rationally optimal equivalents for a monopoly. These points differ from those under perfect competition for a variety of reasons including accounting for inframarginal customers, for whom the provision of service is not in the rational self-interest of the monopolist.

From the materials for a mid-level microeconomics course out of Yale:

Consumers in a monopoly lose the areas A and B compared to perfect competition. The monopolist loses area C and wins area A. Hence, there are distributional implications (consumers lose and the producer gains) as well as efficiency implications (overall welfare decreases).

That is what I mean when I say that rational monopolies do "bad" things of necessity. It is in their rational self-interest to do them. If we regulate that behavior away, which we typically do either by prohibiting them from acting in accord with their economic best interests or, far more commonly by regulating pricing upward to the detriment of the consumer and to the benefit of the monopolist, we have retained the element of coercion, which so many appear to rail against. There is of necessity no free market where monopolies are concerned and this absence is a matter of economic science on the one hand, or political interference on the other. Either way, somebody is taking it in the neck and this is why monopolies are bad for economies and human freedom in general. It's all there in the numbers, which in this case really are not lying.

In and of itself, coercion is not evil. The evil arises in the nature of specific instances of coercion. In the vast majority of cases that I have seen, the coercions in question are in fact evil as all hell. But will we call the coercion to not commit murder, fraud, and other very serious crimes evil? I would think not. My gun, as it sits idly on my hip for the world to observe is in a sense my message of the implicit threat of my personal form of coercion to others that warns of the dire consequences of violating my basic rights. Coercion, applied in the right ways and for the right reasons is a blessing that keeps at bay those who would do harm. Coercion is never correctly suited to the peaceable man who commits no trespass against his fellows. It is there that men go so very badly awry that, for whatever reason, they fail to properly identify the targets of just coercion and force, which is strictly for criminals and in some instances those who have breached their contractual promises. To govern the properly self-governing man is a penultimate evil committed by one against another and should be responded to with utmost harshness, up to and including taking the life of the violator when augury stands unheeded and injury has been sustained or looms imminent. Many will chafe at this idea, claiming that this would lead to a "wild west" environment. Nothing could be further from truth. Moving from our current position to that would, of course, result in some terrible things happening, but after the period of adjustment, the new equilibrium would IMO prove vastly superior to the old.

We use coercion and other force against people who like to light up a joint or stick needles in their arms. We used to do the same (still do on rare occasions) to *****s and those who marry outside of their own "race" (what a sadly stupid notion on its face... like "race traitor", which is fodder for idiots). The ways in which we unjustly coerce vastly outnumbers the just and it is this hopelessly flawed approach to human relations that has landed humanity in a world of hurt and shall yet plunge us into a new Dark Age, only this time it will be highly tech-enabled. By that virtue will Theye retain their death grips upon the throats of the rest.

In a truly free society there would not be antitrust laws,

Once again, this predicates largely on the precise definition of "truly free" and what, exactly, defines "anti-trust". That last bit is not mere pedantic foolery, either. Ask any law professor what defines anti-trust law and a likely response will be "nobody really knows". The anti-trust laws are devised in so befouled a manner as to specify virtually nothing with clarity, which in itself should tell you much about the nature of the American version. The soviets openly posited that theirs was a truly free society. The absurdly blatant childishness of this claim could not have been missed by Helen Keller three days after her death, and yet it was their self-styled definition of soviet society. So on top of all the other problems that we all face at the hands of the tyrants calling themselves "government", we add to it the blatant and purposeful misuse of language against which the vast and overwhelming majority of humanity is unable to fight due mainly to having been trained to a greatly degraded standard of linguistic, and thereby thought, skill.

Im' not trying to be a PITA here, though perhaps I succeed in any event; I am pointing out that words are tricky, important, and that depending on their precise, or not so precise usage, there could be anti-trust laws in even a free land.

Let us briefly rewind to the basics. To be properly free, at least by my definition, men stand centrally within the circle of their rightful prerogatives to act as they please with the one exception that they bring no harm to others, including thwarting their exercise of even rights. That leaves the avenue of possibilities broadly expansive and the restrictions vanishingly narrow. By living in accord with this, the realized potential for freedom and prosperity are optimized to their greatest degree for everyone because opportunity is not being actively diminished by one man against his fellows.

But as we all know, people are not perfect and are not always angels. Even in the best circumstances one man's understanding of what is permissible may stand in stark contrast to that of another's. When those differing understandings clash, how is the dispute to be resolved? And when one man's ethics fall prey to his temptations such that he knowingly violates his brother pursuant to sating his desire to have that to which he is not rightfully entitled, we have yet another flavor of conflicting interests.

When such conflicts arise, how shall they be resolved in a "truly free" society? If rules, however few and well designed they may be, are to have any meaning, then they must be backed with the promise of force against those who refuse or otherwise fail to toe their line. Without it, where is the incentive for "bad" people to behave themselves in accord with those rules? Indeed, without the specter of force behind them, rules become naught but mere suggestions to be respected or ignored as one pleases at any given moment.

If we are not to run amok in chaos with the strong consuming the weak or what have you, which for practical reasons tends to be a very undesirable outcome, then we must have a tiny handful of rules by which we GOVERN OURSELVES. Failing to govern the self within the generous metes of properly contrived rules, we bring the governance of our fellows upon ourselves in compensation. Without this, there is no reason that anyone should of necessity control themselves. I would assert that most people would likely do so just because they are of such an amiable nature as not to wish any conflicts between themselves and their neighbors. But there are always that small minority who refuse to respect the rights of their fellows and act accordingly as they run roughshod hither thither. For such people must corrective measures be taken, either sooner or later, because so far as I can see, such people when left unchecked only become more stridently disrespectful of others.

We could have the law of the jungle, so to speak, where a given offense of one man against another might meet with widely varying consequences depending upon whom the offense is made, and perhaps even depending upon a given man's mood at any given time. Monday morning might see Johnny smack Jimmy for stealing a stick of his gum and Monday afternoon might bring gunshots. Perhaps some rules for dealing with such things would be a good idea? Assuming so for argument's sake, the question then arises regarding who will apply these rules. As far as I am concerned, it could be the aggrieved party so long as application is done knowledgeably and with proper fairness. Makes me no mind at all. Or, we could have courts or tribunals or give it to the minister or a computer sufficient to the task. The salient point is that the rules exist such that we can all become aware of them. They can be called anything you like - anti-trust laws, tort laws, criminal laws, "boojum"... the label matters not, so long as you are consistent with it.

The free market does allow for boycotts against a company if they are seen to be engaged in business practices they do not agree with.

Agreed, but boycotting is not always enough. What about when a real tort is committed? Your company's product is killing people who are dropping like flies? Yes, the market may put them out of business, but what of their responsibility toward those they have harmed? Are such people expected to simply "walk it off"?

This is superior to a government solution since the market decides

I believe you are conflating two separate issues. Markets decide on winners and losers who continue to buy the products of the winners and stop buying those of the losers. The market chose Chevy over Delorean and Yugo. They chose Coke Classic over the New Coke. But the market, taken abstractly, determine what happens when the Ford Pintos start exploding in highway accidents. That becomes a matter of tort equity and possibly even criminality and that mostly boils down to individuals conflicting with large groups (corporations, for example). In this "the market" becomes a market of one and the choice it makes is to try to hold the offending party accountable. Such parties are very often in no humor to be so held and will move heaven and earth to avoid their rightful culpability. That is where rules and the possible application of force comes validly into play.

Education is key, but in many cases there can be added safeguards put in place by other companies. For example, retails can set and publish their own boycott criteria and refuse to carry some companies products, consumers who like the boycott criteria would appreciate that service and shop there knowing they don't have to worry they are supporting something that is harmful.

All well and good and what I may term "morally praiseworthy". But "can" does not mean "will". It is great to see people who choose the high road. Those are not the people for whom the threat of force has been set into place; it is for the scoundrels who often stop at very little in order to get what they want at the unjust expense of ohers.

When the government sets antitrust law the exact terms and application of the law can and will get twisted to favor the politically connected.

Perhaps, but that does not invalidate the need for rules, assuming the avoidance of general chaos in a world that has trained itself for one man to endeavor to take that which rightfully belongs to another without adverse consequence.

That said, this solution won't work well for us now since our system favors corporations and drives their growth at the expense of being self-supporting. The cancer needs to be completed rooted out, starting with the IRS.

This is a very important point that cannot be overemphasized. The cycle must be broken. Simply removing one or two choice elements from the mix will not solve the problem. A thorough cleansing down to the roots is absolutely mandatory if we are to have the least rational hope of making for us a better world.

[Slutter McGee]

I am going to go ahead and reply to this with my own take, and then there are a couple things from Osan's take that I would like to respond to in another post.

[QUOTE=Bryan;5797617]Without reading everything here...

Certainly it can be problematic for one company to gain a monopoly on something but that's also not a guarantee it will "do bad things".

Very true, monopolies born out of innovation are a good thing because they often create more welfare than the deadweight loss that comes from monopoly pricing. (Yes I realize that true monopolies to not exist, The classical model that Osan uses is certainly helpful but, but certainly these firms with extremely high market share don't actually set prices at monopoly level. I'm still going to use the term monopoly pricing for simplicity though.)

In a truly free society there would not be antitrust laws, but that does not mean that its people have to be OK with all companies. The free market does allow for boycotts against a company if they are seen to be engaged in business practices they do not agree with. This is superior to a government solution since the market decides.

I like this idea ideally, but the major problem I see is not so much monopoly that stifles innovation, but instead price fixing. Business with close to monopoly marketshare are generally easier to spot, and the consumer can make these decisions.

But Oligopoly is far different when those business form a cartel and price fix. One major problem is that the successful ones uses price fix intermediate goods, and it is harder to spot the cartel forcing up a price by 3 cents on thousands of different final goods.

The information simply is not there for the consumer to make decisions on weather to boycott, and more specifically who to boycott.

Education is key, but in many cases there can be added safeguards put in place by other companies. For example, retails can set and publish their own boycott criteria and refuse to carry some companies products, consumers who like the boycott criteria would appreciate that service and shop there knowing they don't have to worry they are supporting something that is harmful.

Sure they can, but again, most of the time retails don't have any idea prices are being fixed because they sell the final good. Companies may also have incentives to try and claim a company is a monopoly when it is not. I sell goods to walmart, they force me to sell to them at only slightly higher than my marginal cost. They are so big I have to have their business. We all agree this is good for consumers, but I claim Walmart is practicing predatory pricing. My point is that information is not always correct, and this causes certain frictions in the market.

When the government sets antitrust law the exact terms and application of the law can and will get twisted to favor the politically connected.

I disagree with you here a little bit. The laws aren't twisted in favor of anyone. The problem is that Congress flat out exempts certain industries from the law all together. I think this distinction is important.

Anyway, just a few of my thoughts.

Slutter McGee

[Slutter McGee]

Depends on the definition of "bad". In microeconomics it is a well know fact that monopolies will always produce less of a given product than the market demands. It is something of a counterintuitive reasoning behind it and I do not recall the details at this moment, but it is nevertheless a fact.

I'm going to try and sum up what you are saying, but also point out that monopoly can actually lower price if it is the result of innovation. Optimal output for a profit maximizing firm is where Marginal Cost (MC) and Marginal Revenue (MR) are equal. In a perfectly competitive market Price = to MR, but in a monopoly situation we can find MR by taking the derivative of the total revenue. This is going to lead to a MR curve that moves inward.

The problem is this classical model doesn't take into account cost reductions that might come from tech innovation.

For example. There are 2 perfectly competitive firm competing in a Bertrand game. So they each undercut each other so that their Nash equilibrium is that they both sell at MC. Lets set the inverse demand curve at P = 1-Q and assume MC = (3/4) for both firms. Lets ignore fixed cost for simplicity.Setting MC=MR=P we get (3/4=1-Q) Solving for this we get Q(total)=(1/4). For the individual firms that gives out put of q1 = (1/8) and q2 = (1/8). Putting Q in our inverse demand function we can solve for P=(3/4).

But lets say firm 1 innovates and is able to lower their marginal cost to 0. Not practical I know, but the number need not be 0. Again, just to make the math easier. This allows firm 1 to undercut firm 2 and P= (3/4) minus epsilon (or the tiniest bit possible.) (lets keep their price at 3/4 but recognize it is actually 3/4 minus epsilon...just for simplicity. Firm 1 can no longer compete goes away. giving monopoly power to firm 1.

So firm 1 has a new MR curve. Total revenue is (1-Q)Q or P*Q. Taking the derivative of 1-Q^2 will give us MR=1-2Q, the MR you were referring to in your post. Of course now MC = 0 so setting MR=MC for profit maximization we get 0=1-2Q. Solving this we can get Q= (1/2) and P=1-(1/2) will give us P=(1/2).

As you can see, Price is lower and Quantity is higher under the newly created monopoly.

That is what I mean when I say that rational monopolies do "bad" things of necessity. It is in their rational self-interest to do them... Either way, somebody is taking it in the neck and this is why monopolies are bad for economies and human freedom in general. It's all there in the numbers, which in this case really are not lying.

My main point is that monopolies are not always bad. And monopolization born out of innovation can actually be very good. You were correct in your assessment that the deadweight loss monopolies create is bad, but this can be offset by the lowering of cost based on innovation. So it becomes important that we make a distinction between monopolies that are born out of innovation, and those created through other means.

Moving from our current position to that would, of course, result in some terrible things happening, but after the period of adjustment, the new equilibrium would IMO prove vastly superior to the old.

I am not really following where you are going with this train of thought. In this paragraph or the next one.

Once again, this predicates largely on the precise definition of "truly free" and what, exactly, defines "anti-trust". That last bit is not mere pedantic foolery, either. Ask any law professor what defines anti-trust law and a likely response will be "nobody really knows". The anti-trust laws are devised in so befouled a manner as to specify virtually nothing with clarity, which in itself should tell you much about the nature of the American version.

Agree to some extent here, The Sherman Act was incredibly vague, and the Clayton act not much better. A whole host of anti-trust issues have been interpreted a dozen different ways, causing a lot of harm, especially when these laws are used against companies that are creating more welfare and bettering our society. I would differ with you on one part of this though, and that is the interpretation regarding price fixing. That has always (almost) been interpreted as per se illegal. This is the one area of anti-trust where consumers, politicians, and economists almost always agree. There are only a few examples that differ like the BMI case where transaction costs would be such an incredible detriment that price fixing becomes a necessity. This is the one area (along with patents) where I definitely find issues with Austrian notions that the free market will correct it on its own. Perhaps it will, but how much damage will be done between then and now.

The salient point is that the rules exist such that we can all become aware of them. They can be called anything you like - anti-trust laws, tort laws, criminal laws, "boojum"... the label matters not, so long as you are consistent with it.

There was a lot of philosophical ideas that I didn't really want to respond too, but please correct me if I am wrong in what I think you are saying. Anti-trust laws might be justified because they make us aware of coercion. If that is the case then I might agree especially with Price fixing issues. This is something that may not be evident at all to the consumer without these laws.

Agreed, but boycotting is not always enough. What about when a real tort is committed? Your company's product is killing people who are dropping like flies? Yes, the market may put them out of business, but what of their responsibility toward those they have harmed? Are such people expected to simply "walk it off"?

It sounds like your answer to anti-trust issues is tort, but I see a major problem here. Judges don't understand economics, and certainly aren't going to learn calculus. Leaving these issues uncodified still may leave the issue to private suits, but the outcomes are often going to be based on the most convincing lawyer instead of any real economic realities.

I believe you are conflating two separate issues. Markets decide on winners and losers who continue to buy the products of the winners and stop buying those of the losers. The market chose Chevy over Delorean and Yugo. They chose Coke Classic over the New Coke. But the market, taken abstractly, determine what happens when the Ford Pintos start exploding in highway accidents. That becomes a matter of tort equity and possibly even criminality and that mostly boils down to individuals conflicting with large groups (corporations, for example). In this "the market" becomes a market of one and the choice it makes is to try to hold the offending party accountable. Such parties are very often in no humor to be so held and will move heaven and earth to avoid their rightful culpability. That is where rules and the possible application of force comes validly into play.

Sure, but the issue then becomes how do we hold the party accountable. As I showed earlier, monopoly pricing can actually be a good thing. What apparatus should we use? The DOJ and FTC, for all their issues, employee a lot of economists. Very few cases actually get tried. I find this a far better solution than private suits.

Anyway, I look forward to your reply.

Slutter McGee

[helmuth_hubener]

as soon as I challenge or answer you, instead of looking it up, studying and challenging back, you just ignore everything said and repeat the same goddamn thing over again.

Hey, sorry if you are offended by the way I answer you! As I explained:

Stable cartelization cannot exist. You think it can. You're misinformed. And I told you, let's just set that aside. I could present evidence and proof and logic and reason for 100+ pages as I did with, say, Georgism, and then in the end, you would be even more convinced of the things of which you are convinced now. It's a psychological phenomenon.

For Georgism, that was OK, it was fun, but for anti-trust?

Come on.

Not worth my time.

So we set that aside and move to the crux of the issue. Which is the following:

The boogieman of Big, Bad monopolies and cartels on the Scary, Unregulated market just might be the lamest boogieman ever. Here we have a boogieman that has not harmed my life in any way, has not caused me any pain, has not caused me any problem whatsoever. Nor has it caused you any tangible, measurable problem. It has not upset the lives of anyone on this thread. It's a non-problem! The world is full of vitamins! They're cheap! They're available! There's a total lack of a problem! This is about the furthest thing from anything a normal person would label "a problem" as one could imagine!

Same thing with soda pop. Same thing with whatever example you want to bring up. There's just no issue. It's a boogie-man that doesn't even have any boogie! Lame sauce.

[helmuth_hubener]

Adopt a more adult tone and we will be able to have exchanges of a more civil nature.

I am sorry you're offended by my tone! Please read my posts using a different (more adult) tone of voice in the future. Perhaps that will solve the problem.

Our disagreement is this:

You say that "artificially erecting a barrier for entry into a market" is a tort which should be punishable by tort law.

I say that it clearly is not. It infringes no one's person nor property. "No puppies were harmed in the erection of this artificial entry-barrier." (Unless I owned the puppies.)

It's possible that I am mistaken and haven't thought of something. It's possible that you are defining "artificial erection of a barrier for entry into a market" differently than me. It's possible that there exist actions which you are calling "artificial erection of a barrier for entry into a market" which really are torts.

So, could you give just a single, clear, defined, described action which I can understand which, to you, would constitute an "artificial erection of a barrier for entry into a market" which you think should be actionable as a tort?

[helmuth_hubener]

Let me give you a real example of "monopolization", Slutter, since your examples were so obscure and lame:

Right now Amazon Web Services has, I would estimate, approximately 98% of the market they're in. Every once in a while you'll run across someone using Rackspace, they have probably about 1% of the market. No one uses Google's nor Microsoft's services.

So, if you are a start-up business with an internet-based offering, you are using AWS. They all are.

And.... what's the problem, again?

There is none! Amazon's killing it, providing a terrific service for a terrific price. As a start-up founder, you are greatly benefiting from this.

So, what's the solution to this?

There is none, not that makes any sense. Force a certain percentage of people to buy from the inferior competing services? (What percentage? How do you decide who gets to stay and who has to go?) Break up Amazon Web Services into multiple pieces? Somehow force Amazon to make their value proposition less attractive so that their market share will go down to a more reasonable, non-monopolistic level? We could do the Osan model plan and sue them in tort court and force them to pay millions of dollars to... someone... against whom they aggressed, I guess.... somehow. Or, OK, maybe they didn't aggress against them, maybe just hurt their feelings.

So there's no solution that makes any sane sense, but that's OK, because let me remind you: there's also no problem to solve! It works great!

This is what works great:

Let anyone buy anything they want from anyone they want. Let anyone sell anything they want to anyone they want.

This is what doesn't:

Anything else!

[osan]

I'm going to try and sum up what you are saying, but also point out that monopoly can actually lower price if it is the result of innovation. Optimal output for a profit maximizing firm is where Marginal Cost (MC) and Marginal Revenue (MR) are equal. In a perfectly competitive market Price = to MR, but in a monopoly situation we can find MR by taking the derivative of the total revenue. This is going to lead to a MR curve that moves inward.

The problem is this classical model doesn't take into account cost reductions that might come from tech innovation.

All of the micro economic models and their attendant calculations I was taught do very much indeed take innovation into account, which is expressed as part of the cost function.

Taking the derivative of 1-Q^2

I don't think the derivative of 1-Q**2 = 1-2Q. Rather, it is simply 2Q. Constants have no derivative. That is why when you are integrating f(x) over some interval, the result includes a constant, usu. denoted 'C', which is more or less the y-offset of the function.

My main point is that monopolies are not always bad

But they always do "bad" things, if they are not regulated otherwise. But the regulation also is a bad thing. Therefore, for my money monopolies are generally deleterious to the economy. I do not advocate banning by force, but do object to state-granted privilege of monopoly.

. And monopolization born out of innovation can actually be very good. You were correct in your assessment that the deadweight loss monopolies create is bad, but this can be offset by the lowering of cost based on innovation. So it becomes important that we make a distinction between monopolies that are born out of innovation, and those created through other means.

The deadweight losses to the consumer cannot be avoided without regulation when we are talking of a monopoly operating in its rational self-interest. In this respect, the only thing innovation does is reduce the value of the cost function. But cost remains and the rationally operated monopoly will still operate as a detriment to consumers. The monopoly, if rational, is not going to operate as if there was competition. If they do behave, then they are not rational. It is a simple matter of definitions.

I am not really following where you are going with this train of thought. In this paragraph or the next one.

I thought it was fairly clear. Proper accountability for one's actions v. the nonsense that is enforced by "law" would result in a happier, saner world. We now employ force against people for non-criminal acts. Guy buys a hooker and ends up in jail. Lady lights a joint, jail. Fail to pay taxes - jail. And so forth.

Agree to some extent here, The Sherman Act was incredibly vague, and the Clayton act not much better. A whole host of anti-trust issues have been interpreted a dozen different ways, causing a lot of harm, especially when these laws are used against companies that are creating more welfare and bettering our society. I would differ with you on one part of this though, and that is the interpretation regarding price fixing. That has always (almost) been interpreted as per se illegal. This is the one area of anti-trust where consumers, politicians, and economists almost always agree. There are only a few examples that differ like the BMI case where transaction costs would be such an incredible detriment that price fixing becomes a necessity. This is the one area (along with patents) where I definitely find issues with Austrian notions that the free market will correct it on its own. Perhaps it will, but how much damage will be done between then and now.

One either has free markets or has something else. If costs are such a hazard, then perhaps there is no actual and free market for the product or service in question. If there is a real market, customers will accept the costs. It is as simple as that. BTW, the BI case, as well as others such as Socony and Applalachian coal, are absolute cluster copulations WRT price fixing, with all manner of nonsense about the rules not applying literally.

There was a lot of philosophical ideas that I didn't really want to respond too, but please correct me if I am wrong in what I think you are saying. Anti-trust laws might be justified because they make us aware of coercion.

No. Anti-trust laws are superfluous - redundant, and in the case of real US antitrust, not to be... erm... trusted.

If that is the case then I might agree especially with Price fixing issues. This is something that may not be evident at all to the consumer without these laws.

It sounds like your answer to anti-trust issues is tort, but I see a major problem here. Judges don't understand economics, and certainly aren't going to learn calculus. Leaving these issues uncodified still may leave the issue to private suits, but the outcomes are often going to be based on the most convincing lawyer instead of any real economic realities.

Your point is well taken, but I would maintain that tort is the answer. That tort may place a burden upon juries... well, tough poo. But I certainly get your point and understand that such a situation could lead to all manner of miscarriages of just equity verdicts and rulings. But the question then arises: would specific and presumably competent anti-trust law fix this potential problem? It just appears to me that in this case anti-trust law would constitute a very narrow and deep branch of tort law, put in place because of the great technical difficulties such cases may at times present.

The better solution, in my eyes, is to remove all restrictions on monopolies and oligopolies. Let them collude all they want, but under certain conditions. Firstly they cannot conspire to bar competition. Secondly, there would be no more state-endowed privileges of monopoly. Power companies and the sort would be stuck with "perfect" competition. If you can maintain your monopoly, then goody for you. But if you cannot, do not look to government to pull your bacon from the fire. With this, all rights of way become public domain and must be shared.... utility and phone poles, for example. That could get messy, but if the problems become bad enough, let the players innovate their ways out of them. That is the right way to do things. The current way is lazy or it is the result of wanting something for nothing - like guaranteed market.

Sure, but the issue then becomes how do we hold the party accountable. As I showed earlier, monopoly pricing can actually be a good thing. What apparatus should we use? The DOJ and FTC, for all their issues, employee a lot of economists. Very few cases actually get tried. I find this a far better solution than private suits.

Anyway, I look forward to your reply.

Slutter McGee

We have all the mechanisms we need - we just need to use them properly. If I design the Ford Pinto and market it knowing that in certain types of impacts the gas tank will explode and the passengers turned to crispy critters, I am CRIMINALLY liable for such death and injury. The excuse Ford officials made about the $11 additional cost for putting in a proper tank should cut no mustard and, in fact, should serve as proof of criminality. Those responsible should see prison time and the company required to pay for what they have done.

If indeed the cost increase would have eaten heavily into the market for the Pinto, then perhaps Ford would have been well served to re-examine that market and possibly decide that it simply did not pay to go there.

Most of these issues really do boil down to simple answers. What complicates things most are the conflicting interests. Ford wanted the extra market share and were willing to see a certain number of their customers burn to death or be horribly maimed by their failed products in order to get it. I would call that malice aforethought. They knew, they did anyway... what part of that is not felonious and deserving of a life sentence?

Had they not known and could not have reasonably become aware, they would then only be liable for the tort in $-terms. Had they now known and should have known as per the reasonable man standard, perhaps a lighter criminal sentence would be in order.

The point is that the mechanisms are there. Congress and other legislatures are far too fond of complicating things with endless pages of redundant, conflicting, and outright stupid statutory enactments.

[helmuth_hubener]

So I know this doesn't happen much on the internet, but I agree with some of your theme here. Yes, government mandates that electricity be a certain way. Yes, the reasoning you outline above is circular. That said, can you describe a system in which there is free and unlimited competition in the electricity market?

Thank you for your generous and genial words, I think I can point to such a system. The USA had just such a system in the early days of electrical distribution, starting about 1882. The Edison companies were totally private market companies. They'd go in, build a plant with a couple engines and dynamos, run some wires, and charge subscribers.

There is no reason we could not have several companies in a single town who run cabling, several who own and maintain cabling (perhaps the same ones as the runners, perhaps different), and several who provide services through those cables, along with many sub-contracts and virtual network operators.

Let me give you an industry that I think will help you imagine what I'm proposing. In mobile telephony in the US, a guy will have about four major networks to choose from, along with one or two additional regional or super-regional networks. Physically, there may be only one or two towers with the range to reach his house (or there may be eight). And then there are dozens, approaching hundreds, of what's called MVNOs, like Tracfone, who buy data wholesale from one or more of the non-virtual networks and resell it to customers. From the customer's perspective, the experience on the MVNO is completely different than the one on the company with the parent network -- it's a different business with a different pricing structure, different customer service, different everything. So within a fairly constrained and limited network physically-speaking, there is an abundance of competition and choices.

Electricity could be like that. In fact, the technology to do it for cabled services is less advanced than what's been required to build this system for cable-less services. Edison was burying electrical cable from day one. Having it perched on poles is... one option. It is not necessarily the most robust one.

There is so much advancement that could take place in this industry. In the early days, there was tons of innovation: the feeder and main system, the three-wire system, metering, high-tension long-distance distribution, and on and on! The last fifty years: zip! They still have to drive the truck around to read the meters, for heaven's sake, even with their lame, last-century "wireless" meters that they are only now starting to put in!

If I was a company that wanted to run electric cable through a city, I have the right to do so - same as any other company because we're all equal, right? Now, multiply that by N, or any other large integer - you see where this is going? A market like this quickly gets crowded with multiple competing electrical distribution lines that run rampant all over town - hardly a desirable outcome for a city to have, but one they really can't prevent right?

And why would that not be desirable? Have you really thought this through? Why would it be a problem if 10, or 20, or 100 companies all want to spend thousands or millions of dollars running redundant (or seemingly-redundant) cabling around town? (Redundancy is a very good thing to have, by the way, for reliability and resiliency of a network.) How would this hurt me, personally, as a customer?

It would be nothing but good. It might hurt them, the companies, because there might not be enough demand for a 97th electricity provider to pay them back for their investment running the copper. But for the customers, it's great! Bargain-basement prices! More entrants into the market doesn't hurt customers. Just gives them one more suitor, courting their money. They can always say no and stick with what they've got.

I get your theme, I really do. I am looking at the system as it is and not as it should be.

I am looking at things as they are, also. There is plenty of room underground for more cabling. There is plenty of conductive metal in the world. The technology of ditch-digging is well-established and is becoming more advanced than ever. There exists no technical barrier to a polycentric, competitive electrical market.

And in fact, it's the only system that makes sense. Just as with everything else:

Let people buy electricity from and sell electricity to whomever they want, however they want, whenever they want, whyever they want.

[helmuth_hubener]

Firstly they cannot conspire to bar competition.

Again, what, specifically, does it mean to "conspire to bar competition"? Could you give us all a specific example of a specific action?

[Mr Tansill]

Thank you for your generous and genial words, I think I can point to such a system. The USA had just such a system in the early days of electrical distribution, starting about 1882. The Edison companies were totally private market companies. They'd go in, build a plant with a couple engines and dynamos, run some wires, and charge subscribers.

There is no reason we could not have several companies in a single town who run cabling, several who own and maintain cabling (perhaps the same ones as the runners, perhaps different), and several who provide services through those cables, along with many sub-contracts and virtual network operators.

Let me give you an industry that I think will help you imagine what I'm proposing. In mobile telephony in the US, a guy will have about four major networks to choose from, along with one or two additional regional or super-regional networks. Physically, there may be only one or two towers with the range to reach his house (or there may be eight). And then there are dozens, approaching hundreds, of what's called MVNOs, like Tracfone, who buy data wholesale from one or more of the non-virtual networks and resell it to customers. From the customer's perspective, the experience on the MVNO is completely different than the one on the company with the parent network -- it's a different business with a different pricing structure, different customer service, different everything. So within a fairly constrained and limited network physically-speaking, there is an abundance of competition and choices.

Electricity could be like that. In fact, the technology to do it for cabled services is less advanced than what's been required to build this system for cable-less services. Edison was burying electrical cable from day one. Having it perched on poles is... one option. It is not necessarily the most robust one.

There is so much advancement that could take place in this industry. In the early days, there was tons of innovation: the feeder and main system, the three-wire system, metering, high-tension long-distance distribution, and on and on! The last fifty years: zip! They still have to drive the truck around to read the meters, for heaven's sake, even with their lame, last-century "wireless" meters that they are only now starting to put in!

And why would that not be desirable? Have you really thought this through? Why would it be a problem if 10, or 20, or 100 companies all want to spend thousands or millions of dollars running redundant (or seemingly-redundant) cabling around town? (Redundancy is a very good thing to have, by the way, for reliability and resiliency of a network.) How would this hurt me, personally, as a customer?

It would be nothing but good. It might hurt them, the companies, because there might not be enough demand for a 97th electricity provider to pay them back for their investment running the copper. But for the customers, it's great! Bargain-basement prices! More entrants into the market doesn't hurt customers. Just gives them one more suitor, courting their money. They can always say no and stick with what they've got.

I am looking at things as they are, also. There is plenty of room underground for more cabling. There is plenty of conductive metal in the world. The technology of ditch-digging is well-established and is becoming more advanced than ever. There exists no technical barrier to a polycentric, competitive electrical market.

And in fact, it's the only system that makes sense. Just as with everything else:

Let people buy electricity from and sell electricity to whomever they want, however they want, whenever they want, whyever they want.

Thanks for your very detailed response. I think I maybe didn't give enough detail in my earlier critique, but what I was trying to get at is the fact that it's really not possible to have unbounded growth in a market like electricity because of its dependence on physical landlines for transmission. You cite we could have 10, 20, or 100 companies all competing for our $$$, and I agree that is a good thing, but it's not where my "thought experiment" was intended to lead.

I'm talking about the cable required to have 10,000, or a million, or a billion, or 10^80 companies provide infrastructure for a city - this is admittedly ridiculous, and isn't meant as a serious suggestion, but rather to show the inevitability of the impending collision between the "corporate right" to access a particular market (in this case the hypothetical electricity market) and the "individual right" to preclude more of their property being taken via the use of eminent domain - which is the crux of the point I attempted to make previously. I chose "electricity" simply because of its reliance on land lines, and an easy parallel I saw to how the internet is delivered to people's homes.

So the CORE reason I see that these companies NEED to be regulated is because their business model required and is enabled by the application of eminent domain - their businesses could not function without the application of that concept, and therefore is why I think they need to be regulated. It's necessary to place a reasonable limit on the amount of land that is taken to run cables, etc.

[Bryan]

Depends on the definition of "bad".

Absolutely, which is why I put it in quotes- which obviously isn't totally clear.

In microeconomics it is a well know fact that monopolies will always produce less of a given product than the market demands. It is something of a counterintuitive reasoning behind it and I do not recall the details at this moment, but it is nevertheless a fact. When determining the volume of production, businesses use certain calculations. For monopolies the results are of necessity different from those of other sectors where competition exists. This is good for the monpoly in question, but is presumably bad for the market and does, in point of fact, render that particular market unfree in some manner and degree.

Agreed on most accounts. I would not say that it is a fact that monopolies act that way, it's a fact it is in their best interest to and the data shows they generally do.

That is what I mean when I say that rational monopolies do "bad" things of necessity. It is in their rational self-interest to do them. If we regulate that behavior away, which we typically do either by prohibiting them from acting in accord with their economic best interests or, far more commonly by regulating pricing upward to the detriment of the consumer and to the benefit of the monopolist, we have retained the element of coercion, which so many appear to rail against. There is of necessity no free market where monopolies are concerned and this absence is a matter of economic science on the one hand, or political interference on the other. Either way, somebody is taking it in the neck and this is why monopolies are bad for economies and human freedom in general. It's all there in the numbers, which in this case really are not lying.

In and of itself, coercion is not evil. The evil arises in the nature of specific instances of coercion. In the vast majority of cases that I have seen, the coercions in question are in fact evil as all hell. But will we call the coercion to not commit murder, fraud, and other very serious crimes evil? I would think not.

You're really hitting on the crux of the issue here... it's about morality, ie: what is evil vs not?

Once again, this predicates largely on the precise definition of "truly free" and what, exactly, defines "anti-trust". That last bit is not mere pedantic foolery, either. Ask any law professor what defines anti-trust law and a likely response will be "nobody really knows". The anti-trust laws are devised in so befouled a manner as to specify virtually nothing with clarity, which in itself should tell you much about the nature of the American version.

And this is certainly a good part of the problem, the laws can be molded to suite a particular interest.

Im' not trying to be a PITA here, though perhaps I succeed in any event; I am pointing out that words are tricky, important, and that depending on their precise, or not so precise usage, there could be anti-trust laws in even a free land.

No, you're absolutely correct, we have to be very clear on our terms, as much as a pain as it can be.

Let us briefly rewind to the basics. To be properly free, at least by my definition, men stand centrally within the circle of their rightful prerogatives to act as they please with the one exception that they bring no harm to others, including thwarting their exercise of even rights. That leaves the avenue of possibilities broadly expansive and the restrictions vanishingly narrow. By living in accord with this, the realized potential for freedom and prosperity are optimized to their greatest degree for everyone because opportunity is not being actively diminished by one man against his fellows.

But as we all know, people are not perfect and are not always angels. Even in the best circumstances one man's understanding of what is permissible may stand in stark contrast to that of another's. When those differing understandings clash, how is the dispute to be resolved? And when one man's ethics fall prey to his temptations such that he knowingly violates his brother pursuant to sating his desire to have that to which he is not rightfully entitled, we have yet another flavor of conflicting interests.

When such conflicts arise, how shall they be resolved in a "truly free" society? If rules, however few and well designed they may be, are to have any meaning, then they must be backed with the promise of force against those who refuse or otherwise fail to toe their line. Without it, where is the incentive for "bad" people to behave themselves in accord with those rules? Indeed, without the specter of force behind them, rules become naught but mere suggestions to be respected or ignored as one pleases at any given moment.

If we are not to run amok in chaos with the strong consuming the weak or what have you, which for practical reasons tends to be a very undesirable outcome, then we must have a tiny handful of rules by which we GOVERN OURSELVES. Failing to govern the self within the generous metes of properly contrived rules, we bring the governance of our fellows upon ourselves in compensation. Without this, there is no reason that anyone should of necessity control themselves. I would assert that most people would likely do so just because they are of such an amiable nature as not to wish any conflicts between themselves and their neighbors. But there are always that small minority who refuse to respect the rights of their fellows and act accordingly as they run roughshod hither thither. For such people must corrective measures be taken, either sooner or later, because so far as I can see, such people when left unchecked only become more stridently disrespectful of others.

We could have the law of the jungle, so to speak, where a given offense of one man against another might meet with widely varying consequences depending upon whom the offense is made, and perhaps even depending upon a given man's mood at any given time. Monday morning might see Johnny smack Jimmy for stealing a stick of his gum and Monday afternoon might bring gunshots. Perhaps some rules for dealing with such things would be a good idea? Assuming so for argument's sake, the question then arises regarding who will apply these rules. As far as I am concerned, it could be the aggrieved party so long as application is done knowledgeably and with proper fairness. Makes me no mind at all. Or, we could have courts or tribunals or give it to the minister or a computer sufficient to the task. The salient point is that the rules exist such that we can all become aware of them. They can be called anything you like - anti-trust laws, tort laws, criminal laws, "boojum"... the label matters not, so long as you are consistent with it.

+rep. We need another thread to get into this.

Agreed, but boycotting is not always enough. What about when a real tort is committed? Your company's product is killing people who are dropping like flies? Yes, the market may put them out of business, but what of their responsibility toward those they have harmed? Are such people expected to simply "walk it off"?

In these cases that is really a completely different matter.

I believe you are conflating two separate issues. Markets decide on winners and losers who continue to buy the products of the winners and stop buying those of the losers. The market chose Chevy over Delorean and Yugo. They chose Coke Classic over the New Coke. But the market, taken abstractly, determine what happens when the Ford Pintos start exploding in highway accidents.

My point is that if the market is smart it will do things that will avoid supporting a monopoly because it is in their best interests not to. For example, if Chevy started to use questionable business tactics and started to wipe out all the other car companies, when it came to buying your next car you might say you don't want to buy a Chevy because they are trying to get a monopoly, so every if they are now better/cheaper you'd buy brand X since it's in your overall best interest.

All well and good and what I may term "morally praiseworthy". But "can" does not mean "will". It is great to see people who choose the high road. Those are not the people for whom the threat of force has been set into place; it is for the scoundrels who often stop at very little in order to get what they want at the unjust expense of ohers.

Perhaps, but that does not invalidate the need for rules, assuming the avoidance of general chaos in a world that has trained itself for one man to endeavor to take that which rightfully belongs to another without adverse consequence.

Agreed, this is part of the real challenges.

[Bryan]

I like this idea ideally, but the major problem I see is not so much monopoly that stifles innovation, but instead price fixing. Business with close to monopoly marketshare are generally easier to spot, and the consumer can make these decisions.

But Oligopoly is far different when those business form a cartel and price fix. One major problem is that the successful ones uses price fix intermediate goods, and it is harder to spot the cartel forcing up a price by 3 cents on thousands of different final goods.

The information simply is not there for the consumer to make decisions on weather to boycott, and more specifically who to boycott.

I agree, this can be a problem, but it's one that is getting easier to do with the internet- it's also why I suggest the use of 3rd parties that provide information, or retailers who limit who they buy from to limit monopolies.

Sure they can, but again, most of the time retails don't have any idea prices are being fixed because they sell the final good.

This is where third party researchers can help. You'll also get whistle blowers who can provide leads.

Companies may also have incentives to try and claim a company is a monopoly when it is not.

Agreed, but you'd also have a similar problem with any government solution.

I sell goods to walmart, they force me to sell to them at only slightly higher than my marginal cost. They are so big I have to have their business. We all agree this is good for consumers, but I claim Walmart is practicing predatory pricing. My point is that information is not always correct, and this causes certain frictions in the market.

You'll always have issues like this, the question is how are they managed.

I disagree with you here a little bit. The laws aren't twisted in favor of anyone. The problem is that Congress flat out exempts certain industries from the law all together. I think this distinction is important.

So you're saying the problem is worse than I'm stating...

Anyway, just a few of my thoughts.

Slutter McGee

Great thread.

[Bryan]

I reformulated a better response to this question, breaking the problem down into specific issues with specific axioms for each issue.


Moral Issues
Axiom 1: Having a monopoly does not mean that you have done anything morally wrong, all of your property and clients can be justly acquired.
Axiom 2: Antitrust laws only have value when they are back by forcing others to comply, such as with breaking up a monopoly by taking control over resources.
Axiom 3: It is immoral to apply force against others when they have not done anything wrong.
Axiom 4: Antitrust laws that are not based on addressing immoral actions are immoral as they will require force against others who did nothing wrong.
Axiom 5: As the definition and scope of antitrust laws is not limited to immoral actions they are immoral.

Individual Choice Issues
Axiom 6: While it can be problematic for one company to gain a monopoly on something that does not guarantee they would do things you don’t like.
Axiom 7: Antitrust laws remove your personal choice of what you find acceptable vs. not acceptable and puts it in the hands of the government.

Government Power Issues
Axiom 8: Antitrust laws give more control and power to the government.
Axiom 9: The more power a government has the more likely it will become a target of corruption.
Axiom 10: History and natural law show that the consolation of power will lead to a distortion of that power to favor the politically connected.

Government Spending Issues
Axiom 11: The development of antitrust laws, the monitoring of the market for violations and the prosecution of violators requires government spending unless everyone works for free.
Axiom 12: People do not work for free, thus government spending is required.
Axiom 13: Government spending requires additional revenue either with taxes, fees or fines.
<Deferring discussion on the issues with taxes, fees or fines>
Axiom 14: Government taxes and fees remove money from the free market.

Free Market Alternative
Axiom 15: The free market offers solutions that can stop undesirable behavior with the use of boycotts and bad public relations. Consumers with limited time can rely on third party research firms for important information or shop at retailors who purchase based on acceptable behavior policies by a company.

Conclusion
Free market solutions (Axiom 15) are superior to government solutions which are immoral (Axiom 5), reduce your choice (Axiom 7) and can actually make market matters worse (Axiom 10 and 14).

Additional considerations could analyze the cost on the market to deal with antitrust laws and how companies unnecessarily distort themselves to adhere to the laws.

[helmuth_hubener]

I'm talking about the cable required to have 10,000, or a million, or a billion, or 10^80 companies provide infrastructure for a city - this is admittedly ridiculous, and isn't meant as a serious suggestion, but rather to show the inevitability of the impending collision between the "corporate right" to access a particular market (in this case the hypothetical electricity market) and the "individual right" to preclude more of their property being taken via the use of eminent domain

I was merely trying to keep this in the realm of what you would see as "the real world" by avoiding changing anything else in society. In my explanation of how a free market in electricity could work (and has!) governments are still robbing and slaughtering and everything is still as it is in that regard, except for one change that there is now a free market in electricity. Now that is a relatively free market -- the electric companies and customers are still paying taxes and toeing lines and doing all the things good little citizens should do. It's just that there's free entrance and free competition in the industry. Anyone can start a cable-laying company and run cable.

So, what is your problem with this proposal? It seems to be this: eminent domain exists. Now I am opposed to eminent domain. However, assuming eminent domain continues, would there really be a problem?

Answer: no. Are there going to be a million or a billion or 10^80 companies all wanting to run cable through your backyard? No, Mr. Tansill, there obviously are not. You know that's an absurd propisition and are just using it to make a point. But what is the point exactly? You're mixing the absurd and the realistic, claiming to be interested in grounded, hard-nosed reality, but then making your conclusions based on a fantastical, imaginary, impossible scenario. That seems confused. Let's stick with one or the other, and of the two, I say let's just stick with the practical and realistic.

So, forget about 10^80. What would a free market in electrical distribution actually look like? There would be multiple companies. In some places, there may be two or three separate physical copper cables going to each home. In other places, there may be only one. In some places there will be, as today, none at all. Did you know that? If you buy 40 acres of unimproved land, you may have to pay upwards of $20,000, $40,000, even $100,000, to get the electrical company to run a line out to your place. Under my system, instead of having to deal with "the" electric company, you'll have your choice of who you want to run the line. Perhaps you'll even run your own to the nearest node, retaining ownership of the line yourself and keeping your options open to connect it at the node to whatever network you choose. After all, if you're paying for it anyway, why shouldn't you own it?

Anyway, that's in rural areas. In more developed populated places, lines already exist. Generally, each home right now has running to it twisted pair copper line (for phone), higher gauge non-twisted copper line (for power), and coaxial line (for television), one of each. All three of these could, in theory, carry electricity, by the way. When the market is opened up, that is the base-point it will be starting from. There may be one or two entrepreneurs in town that then are excited about building an electrical distribution company who will then start laying lines to certain neighborhoods where they think or know there is a demand. It may work something like this:

https://fiber.google.com/cities/provo/how/

In all likelihood, these new entrepreneurs will likely pair data and other advanced services with the raw electricity, since as long as you're going to the expense of digging a trench, why not fill it up with as much unique value proposition as possible? Plus, entrepreneurs tend to be innovative people. No one's going to get excited about, "Hey, let's go to all the effort to start a new company to compete with Neanderthal Power and Light by being exactly like Neanderthal Power and Light!" They will come up with ideas and fusions and innovations I can't even predict.

In any case, there might be two such people. There might be five. There might be none. It just depends on what entrepreneurs you have in your town, and whether they can get excited about electricity distribution or something to do with it. They might dig a few trenches along your property line in the back of your backyard or wherever the existing cables lie. Not a big deal. Not going to cause any problem. There is not going to be some sort of trenching Apocalypse, destroying humanity with 10^80th cables upsetting the Earth's gravitational field or something.

Can we agree? Realistically, not going to be a problem.

Also, eminent domain is absolutely not necessary to such a market. Do you think Google Fiber needs eminent domain? Ha, ha, ha, ha, ha! People would crawl over nails to sign the contracts and give permission to make their entire yard a gaping crater for the next hundred years in order to get this service.

And so your core objection:

So the CORE reason I see that these companies NEED to be regulated is because their business model required and is enabled by the application of eminent domain - their businesses could not function without the application of that concept, and therefore is why I think they need to be regulated.

...I think is false.

But even if it were true, just because companies use eminent domain (whether "required" by realities or not), it does not then follow that because of that we must forever be stuck under a state-granted or state-run (depending on your locality) forcible monopoly system. That does not follow. Even if the eminent domain system remains exactly as it is, we do not need a monopoly. We absolutely can have competition in electrical provision. It's very realistic and practical. It's very doable. And it would be a great improvement.

There is simply no excuse left not to do it.

[Mr Tansill]

At this point, I think we just disagree.

I was using the electricity example as a demonstration to show that at some point, there will be a time where other people's property rights have to be overruled in order to make way for corporate access to a market OR the government will be forced to restrict access to that market. It wasn't meant as a realistic scenario, and I even tried to make that clear by explicitly identifying it's purpose. Sometimes people draft arguments like that to examine the consequence of universalizing a principle. You used it as a launching point to create a scenario with a forest of details I really couldn't follow.

In either case, it was merely meant to explain my thought process behind my position that these companies should have restrictions placed on them because of the reality in which they were created, and through which they have the privilege of operating. In my view, that core, enabling feature they could not, and cannot exist without, is the application (or previous application) of eminent domain. It's my position that easements on property, while I think are necessary, are also attended by special responsibilities - namely, that the corporations who get to profit by having a government imposed right-of-way through someone's backyard in order to conduct business, don't have the right to exploit that necessary monopoly.

Here's my favorite video on the subject:

[osan]

At this point, I think we just disagree.

I was using the electricity example as a demonstration to show that at some point, there will be a time where other people's property rights have to be overruled in order to make way for corporate access to a market OR the government will be forced to restrict access to that market. It wasn't meant as a realistic scenario, and I even tried to make that clear by explicitly identifying it's purpose. Sometimes people draft arguments like that to examine the consequence of universalizing a principle. You used it as a launching point to create a scenario with a forest of details I really couldn't follow.

In either case, it was merely meant to explain my thought process behind my position that these companies should have restrictions placed on them because of the reality in which they were created, and through which they have the privilege of operating. In my view, that core, enabling feature they could not, and cannot exist without, is the application (or previous application) of eminent domain. It's my position that easements on property, while I think are necessary, are also attended by special responsibilities - namely, that the corporations who get to profit by having a government imposed right-of-way through someone's backyard in order to conduct business, don't have the right to exploit that necessary monopoly.

Here's my favorite video on the subject:

Perhaps this is closer to the truth:



This, closer still:

[helmuth_hubener]

At this point, I think we just disagree.

Maybe. More likely, you don't exactly understand what I'm talking about. As you put it:

You used it as a launching point to create a scenario with a forest of details I really couldn't follow.

My unsolicited advice: If you are going to try to use technological arguments to justify your politisophical prejudices, you should try to actually understand the technology. That is all.

Let me one more time explain,... no, let me sum up:

Mr. Tansill point, one and only: These jerks only exist at all and rake in the dough because of eminent domain. Because of that, the gov't goons should make (very reasonable, moderate, helpful, and pro-public, of course) regulations kindly guiding the jerks by the hand and preventing them from being quite so jerky. Is that a fair summary?

Helmuth's line of defense number one: Core assertion is false. Electrical, and what you apparently really want to talk about: internet, services have been provided in the past with no eminent domain. None! Internet is even today widely provided with no eminent domain involved. None! No eminent domain! Eminent domain is not a necessary prerequisite for the existence of these industries. Period. The single leg your argument was standing on is thus cut off.

Helmuth's line of defense number two: Let's temporarily rivet your leg back on, though, just for fun. If eminent domain were necessary for these industries, it in no way follows that because of that the industries would need to be run on a closed, barred-and-gated monopoly model. It absolutely does not follow. The two statements are unconnected. "Because eminent domain, therefore gov't-regulated monopoly" is not a logical statement.

Let's have free entry. Let's have free competition. And let's have freedom! Do we disagree about that, Mr. T?

[ClydeCoulter]

At this point, I think we just disagree.

I was using the electricity example as a demonstration to show that at some point, there will be a time where other people's property rights have to be overruled in order to make way for corporate access to a market OR the government will be forced to restrict access to that market. It wasn't meant as a realistic scenario, and I even tried to make that clear by explicitly identifying it's purpose. Sometimes people draft arguments like that to examine the consequence of universalizing a principle. You used it as a launching point to create a scenario with a forest of details I really couldn't follow.

In either case, it was merely meant to explain my thought process behind my position that these companies should have restrictions placed on them because of the reality in which they were created, and through which they have the privilege of operating. In my view, that core, enabling feature they could not, and cannot exist without, is the application (or previous application) of eminent domain. It's my position that easements on property, while I think are necessary, are also attended by special responsibilities - namely, that the corporations who get to profit by having a government imposed right-of-way through someone's backyard in order to conduct business, don't have the right to exploit that necessary monopoly.

Here's my favorite video on the subject:

The comparison to delivery of more packages to delivery of lots of data being profitable is comparing oranges to rotten apples.

Building larger pipelines to push greater amounts of data doesn't increase profit (but eats it) without raising rates. But, delivering more packages does increase the profits of UPS and other carriers.