Hacker News Reader

Comment by chiaro | Hacker News Reader

It's neither? It has more market power than, say, Chevrolet, but less than AT&T. Receiving ~1.25Bn from the taxpayer where smaller companies wouldn't get anything is more a function of its size and institutional failure on behalf of the individual states.

View on HN

I don't think Tesla is anywhere close to market dominance. Their problem may be more long-term survival than achieving a monopoly in my view.

They are leading in the niche, but that's besides the point: market power refers to the ability to raise prices above what is truly competitive, which they certainly have to some extent while not being a monopoly.

> ... market power refers to the ability to raise prices above what is truly competitive, which they certainly have to some extent while not being a monopoly.

Have they really, though? I mean, a Maserati is also priced very highly. Certainly much higher than what is "truly competitive" for a luxury vehicle. But I don't think anyone would call them a monopoly. Likewise, Tesla is selling a unique product within a class, and some people are willing to pay more for that product. In other words, they have a product with a competitive advantage, and that allows them to price higher than the competition. This is healthy and normal elastic demand. I mean, price was a big reason the Model 3 presold in a week about three times the entire Model S volume.

The typical argument in that favour is that a product comes with certain intangible benefits, be it social signalling or personal actualisation that helps explain why firms with strong brand identity can push higher margins in otherwise competitive markets. This is a partial explanation to the extent that it doesn't play nicely with another prevailing theory that mindshare and niche dominance enables market power through greater information asymmetry. The presence of a larger car market curtails how market power can be exercised, to the extent that your hydrocarbon cars are substitute goods for electric ones.

I have no real issue with Tesla from a competitive perspective. I'm simply making two fairly seperate points, that monopolies are always bad, and Tesla has accrued many more benefits from the state than penalties, on account of its size.

They created a little niche in large market but it's pretty easy to avoid them if you don't like their cars.

Reply on news.ycombinator.com