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Comment by remich | Hacker News Reader

Your framework is interesting, but it would seem to preclude much of the historical antitrust action of the past, including the pioneering actions against Ma Bell and, even earlier, ALCOA and Standard Oil.

Unless you mean that the very existence of a vertical monopoly is a positive externality that keeps the business going. In which case, yes, which is why those firms had to be broken up.

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You could have a theory of antitrust that allows for both rules - if a company is across multiple fields of business or if a company is too much of a single field, it gets split up. So Standard Oil and Ma Bell get split up for controlling too much of their industries and using it in anti-consumer practices, and Amazon gets split up (AWS vs everything else) because it’s inherently too large and it’s better for the economy for them to be split up.

of course, but i'd argue that too much of a single field is usually a case of a company that's actually in multiple businesses (see the mcdonald's example in a sibling thread).

my simplified perspective is a melding of the brandeisian (big is bad) and the chicago schools (economic efficiency for the win!), touched on in the article, so i certainly have no problems with synthesis in matters of antitrust. =)

strictly speaking, a monopoly by itself is probably not a positive externality, since it isn't external, other than the regulatory permissiveness that allows it. to me a vertical monopoly isn't necessarily a single business, even if the stack as a whole principally delivers a single type of good or service.

if a layer in the stack can thrive on its own as an independent ecosystem, then that's a "separate business", and trust busters should look askew at conglomerations across such boundaries. independent companies will make the whole industry more efficient in the long run, because of competition. in such a configuration, companies can make deals with each other across stack boundaries and even invest in each other as long as a controlling interest hasn't been reached.

ma bell for instance vertically integrated telegraph, telephone, transmission, real estate, consumer phones, answering services, and who knows how many other whole businesses together to form its monopoly. many, if not all, of those could have been thriving markets on their own.

I see. I mostly agree, though I definitely think the delineation problem is more difficult with vertical rather than horizontal monopolies, e.g. (to stretch the example), McDonald's franchises currently cook all the food they sell. They could instead buy pre-cooked food from a separate business, but would such a breakup of functions benefit the economy? Where that line is seems like a hard problem for a court to solve.

mcdonald's is actually a good example. it's at least 3 businesses on top of the nominal one of fast food: franchising, supply chain, and real estate. franchisees pay for access to the mcdonald's brand, trademarks, and shared marketing. in addition, mcdonald's corporate provides complete supply chain support, so franchisees buy all of their food and materials through mcdonald's itself or from its approved suppliers. mcdonald's corporate also owns the real estate that many franchises sit atop, so it's a landlord to boot.

it'd be easy to split those businesses into separate ones, as it's plainly obvious that all three businesses can viably stand alone, apart from serving fast food. you might argue that that'd dilute the brand value because the product wouldn't be as uniform, but you just have to look at the international variation to realize that that's not so important to brand value.

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