Hacker News Reader

Comment by arh5451 | Hacker News Reader

The only medium for creating monopolistic power is government. Unless laws or regulation exist to create barriers of entry to market by businesses then the prices are always competitive.

Cartels have been proven 100x over to not be feasible. Even classic examples like standard oil prove the monopolies aren't possible, because Standard Oil was out competing all market competitors on price, quality, and innovation.

Only thing close to a modern day monopolistic behavior is growth before profit capitalism we've seen over the last 20 years. Now that interest rates are going back up it's finally coming to an end.

View on HN

> The only medium for creating monopolistic power is government.

This is naively incorrect.

Economies of scale exist. Larger companies have lower overheads, which leads to an advantage in pricing, which leads to large companies becoming larger, until there's only one left. This is a natural consequence of markets: absent outside intervention, they trend towards monopoly over time. Competition is not the natural state of a market. If you want competition (which you should, because competition is good for consumers) then you need outside intervention, which, if all else fails, must be the task of the government.

IF competition cant exist because of economies of scale, that means consumers are are better off with the monopoly than with competition.

Let me say that again, if a new competitor cannot undercut a monopoly, the customer would not be better off with more competition.

Nobody wants the government to break up a monopoly because economies of scale allow them to sell goods too cheaply.

If profits are high, there is room for competition.

If profits are low, customers are getting a good deal.

The only things that breaks this are 1) regulation to prevent competition despite high profits, or 2) anti-competitive practices like price dumping, exclusive contracting, ect.

Imagine a world where only one company can make cutting-edge semiconductors. A competitor could easily undercut their prices, but only after years of research and billions of dollars, which nobody is willing to invest.

You can say "not a true monopoly" all you want, but the fact is buyers would be much better off if there was more than one supplier. And there have been many cases of such a dominant supplier in the last few years.

Reply on news.ycombinator.com