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Comment by WalterBright | Hacker News Reader

> Markets, left to their own accord, naturally tend to monopolies and cooperation

No, they don't. To become a monopoly, they need the collusion of government to outlaw competition.

The poster boy of monopolies, Standard Oil, never had a monopoly. During its rise, it dropped the consumer price of kerosene 70%. Its market share dropped steadily during the years of the anti-trust trial.

> It’s trivial for them to move in lock-step and everyone wins… except the consumer.

Ever wonder what happened to IBM?

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Hmm. Why should the word monopoly only refer to the legal mechanism by which market exclusivity is enforced rather than referring to the resulting market structure or market power?

If I'm not legally prohibited from competing with a firm, but that firm's position nonetheless also makes it unprofitable for me to enter or compete, what is that market structure called?

If it's unprofitable for you, that means the other firm is doing a better job serving customers than you.

Does it? This is an empirical observation matched with a causal claim. How have you controlled for your confounding variables?

Responding to you generally and not to this comment.

I want to thank you for explaining economic principles even if the OP doesn't understand them. As someone who has less econ background then they'd like — your explanations are clear.

Are you saying that it's impossible for a company to become a monopoly purely under its own power?

Nothing is impossible, but it's really difficult. If some greedy entrepreneur is raking in the cash with some product or service then of course another greedy entrepreneur will see that and start competing with the first guy. The evil corporations you are worried about are not going to cooperate with another corporation. They're evil! At best they'll fake it for a while and then backstab each other.

And if they aren't evil backstabbers and they are actually friendly and good at cooperating then it's a win for all of us!

You can always present a case history of one.

You said:

> To become a monopoly, they need the collusion of government to outlaw competition.

Yes, I did. And you can prove that wrong with a case history.

You really need to answer questions directly as asked, and not whatever question it is you think the other person is asking. Doing this only creates confusion. There are many occasions where I see this kind of miscommunication happening between users on this site without either person realizing it.

In this case I asked a yes or no question because I simply wanted to clarify and understand the nuance of your position. You shouldn't always assume that every person responding to your comments is immediately trying to argue against you (although I'll admit this a fairly accurate heuristic for internet discussions in general).

Instead of answering with "Yes, (I believe) it is impossible" or "No, it is possible", you answered with the following:

"You can always present a case history of one".

Because I asked you a yes/no question, I am going to interpret your response as a framing of a yes/no answer. I interpreted your comment as: "(No), you (one) can always present a case history of one".

Hence my confusion: it sounded like you were holding both beliefs simultaneously: "Yes, natural monopolies are impossible, but there are counterexamples".

In the future please just answer the questions as they are asked.

If some believes free market monopolies exist, they ought to know of some examples. Hence why I ask for a case, it's the easiest way to point out that they don't exist.

I mean, they don't exist by construction per your definitions. A free market is a market that lacks state intervention beyond what's required to enforce property rights, and a monopoly is a state-imposed single seller in a market.

A free market in this construction must necessarily lack monopolies. There is no counterfactual observation that could falsify the proposition because the definition of free market doesn't admit a counterexample.

Congratulations. That's an epistemic trap.

A monopoly is not a "state-imposed single seller". Where'd you get that definition from?

There are many examples of natural monopolies, which is a concept that has been recognized in economic theory for at least two centuries. Walter is either being deliberately obtuse or is ignorant of history.

AT&T, Western Union, most railroads, many local utilities—all examples of monopolies that formed "naturally" i.e. without state intervention.

Insofar as there was state intervention in the formation of these monopolies, it was because the state intervened on the company's behalf to suspend antitrust law—such as in the case of AT&T, where the government decided it would be most efficient to permit AT&T to continue operating as a monopoly (until it didn't, and broke AT&T up).

This is WalterBright's operative definition of a monopoly[0], and I'd agree that he's being either deliberately obtuse (perhaps via ideology?) or is misrepresenting history (perhaps also via ideology?).

I'm honestly fine with whatever definitions, but they need to be able to cross the chasm from concept to criterion in conjunction or disjunction to be useful as a means of discriminating. So far, Walter's proposed definitions for monopolies and free markets together fail this test even if they're separately some measure of fine, inaccuracies relative to their term-of-art counterparts notwithstanding.

0: https://news.ycombinator.com/item?id=49617983

You have completely missed the point of my comment. What do you think I am trying to communicate to you?

All you did was say that Standard Oil doesn't count as a monopoly because you claim that you need a government intervention to be a monopoly, which is not a definition I have heard and certainly does not fall under colloquial definitions. Your big rebuttle to it, as far as I can tell, appears to be "Nuh uh, now prove me wrong!!!".

There are plenty of companies that have gotten to monopolistic or near-monopolistic categories without a government declaring it; Microsoft in the 90's, for example, was famously anti-competitive and actually was briefly declared a monopoly (though that was overturned in higher courts). As far as I'm aware, it wasn't the US government that artificially made Microsoft anticompetitive.

Plenty? Let's start with Microsoft. It did not have a monopoly. Apple and Linux computers were available for sale.

Any other examples?

You can have a monopoly without having 100% of the market. Even one of the most famous monopolies, AT&T throughout the 20th century, never had 100% of the market. You know this, so now you're just actively lying.

Microsoft was briefly deemed a monopoly by engaging in anti-competitive practices and abusing its market leadership to squash competition, like artificially blocking the use of DR-DOS to install Windows [1].

[1] https://en.wikipedia.org/wiki/AARD_code

Can't reply to tombert, we're too deeply nested for hacker news, but the Microsoft example is great. The government didn't have anything to do with them being a monopoly? Have you heard of copyright laws? Did you know that Microsoft's whole business depends on the application of copyright laws to software? Did you know copyright protection used to only last for a few years? And then copyright holders lobbied government for longer and longer copyright protection?

Even if I concede all of this, and I really don’t, that doesn’t imply that it was a concerted effort to make Microsoft in particular a monopoly, at least not in the same way that they, for example, made AT&T a monopoly.

Are you suggesting that the existence of laws means that monopolies are inherently government ordained? Great, then that means that the standard oil example still holds.

P.S. you can actually keep replying, there’s just an artificial timer as they get nested. You can actually get around that if you click on the date/time (e.g. “2 hours ago”) and reply directly.

Aha! Neat trick to defeat hacker news's attempt to keep us from having long unproductive conversations. Let's keep it going.

Does it matter if the government purposely ordained the monopoly or stupidly made it possible by extending copyright protections indefinitely? The government is the problem either way and they shouldn't have that much power!

It's still government protection which caused Microsoft to be a monopoly. You provide a great example of libertarian goalpost-moving:

> Microsoft wasn't protected by the government.

> Yes they were, by copyright law.

> But the government didn't set out to make Microsoft a monopoly.

Over time, I've come to conclude that copyright should not be a monopoly, or at least the copyright protection shouldn't last more than a handful of years.

You might want to read "Titan" by Chernow before telling me I am wrong.

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