Correct.
1. Give away profit, to increase market share
2. Repeat
3. Enjoy your new monopoly
4. With competition gone and customers additionally locked in via your technology platform: Set your prices as you wish
1. Give away profit, to increase market share
2. Repeat
3. Enjoy your new monopoly
4. With competition gone and customers additionally locked in via your technology platform: Set your prices as you wish
*Note: there is no such thing as a non-government enforced monopoly. Marketshare != Monopoly
Microsoft (desktop OS), standard oil.
"Some economic historians have observed that Standard Oil was in the process of losing its monopoly at the time of its breakup in 1911. Although Standard had 90 percent of American refining capacity in 1880, by 1911 that had shrunk to between 60 and 65 percent, due to the expansion in capacity by competitors.[41] Numerous regional competitors (such as Pure Oil in the East, Texaco and Gulf Oil in the Gulf Coast, Cities Service and Sun in the Midcontinent, Union in California, and Shell overseas) had organized themselves into competitive vertically integrated oil companies, the industry structure pioneered years earlier by Standard itself. In addition, demand for petroleum products was increasing more rapidly than the ability of Standard to expand. The result was that although in 1911 Standard still controlled most production in the older US regions of the Appalachian Basin (78 percent share, down from 92 percent in 1880), Lima-Indiana (90 percent, down from 95 percent in 1906), and the Illinois Basin (83 percent, down from 100 percent in 1906), its share was much lower in the rapidly expanding new regions that would dominate US oil production in the 20th century. In 1911 Standard controlled only 44 percent of production in the Midcontinent, 29 percent in California, and 10 percent on the Gulf Coast.[42]"
http://en.wikipedia.org/wiki/Standard_Oil#Monopoly_charges_a...
There's also no great evidence that Standard Oil raised prices once they had established such large market share. http://research.stlouisfed.org/fred2/graph/?id=M04182US000NY...
That does not mean there's no such thing as a non-government enforced monopoly.
At its peak it had 90% market-share. It was never "illegal" or "impossible" to sell petroleum in competition to it -- just highly very difficult to compete with them.
In the same vein, google has 9-1 share of the internet search market....should we call it a "monopoly"?
Standard Oil, at its peak, had an actual near-monopoly on most discovered sources of oil. You can't even get into the oil business unless you discover more oil -- in theory, they could have used their resources to stay on top of each oil source as it was discovered. No amount of old-fashioned ingenuity can compete with that.
Once a company hits 75% or so they have no "economic need" to write restrictive exclusive contracts as they basically control the market. Remember, the RULES OF FREE MARKETS assume there are ALWAYS enough buyers and sellers that NEITHER side has a group large enough to independently affect the market prices. As soon as a buyer or seller hits about 25% they aren't following the rules of the "Free Market system" they are Capitalists attempting to REMOVE the RIGHTS of the Free Market system from others using aggregation of capital resources.