Market Concentration Is Threatening the US Economy • Hacker News Board

Re: Market Concentration Is Threatening the US Economy

#21

Post by smallgovt » Wed, Mar 13, 2019, 4:21 PM UTC

chrisseaton wrote: post #3

gumby wrote: post #2

The irony of monopoly is that when broken upmitntypically benefits the former monopoly parts. Rockefeller Made more money after being broken up than he had as a monopolist. AT&T has underperformed since being reassembled from its post-breakup pieces, which had flourished with competition.

Is that's the case then why don't companies voluntarily break up?

I'm guessing that the cited post-breakup benefits accrue from a renewed level of focus.

There are plenty examples of public companies breaking themselves up for this reason. e.g. IAC breaking off Match.com and ANGI Home Services. Service Master breaking off American Home Shield.

Re: Market Concentration Is Threatening the US Economy

#22

Post by fiter » Wed, Mar 13, 2019, 4:22 PM UTC

lotsofpulp wrote: post #9

This is the inevitable result of efficiencies of scale. With computers, databases, instant communications, why would a business be restricted in anyway to expand as far as it can once it has perfected whatever it is selling. In the long run, it would be beneficial for all consumers to be able to select from multiple sellers, but in the short term, it's beneficial for each consumer to purchase from the whomever is giv…

We want to benefit from efficiencies of scale while decreasing the size of every company's "moat". That is, consumers would benefit most if it was easy to start a competitor if/when the top bank/retailer/etc tried to take advantage of its position.

Re: Market Concentration Is Threatening the US Economy

#23

Post by DennisP » Wed, Mar 13, 2019, 4:24 PM UTC

gumby wrote: post #17

chrisseaton wrote: post #3

Earlier quoted context omitted.

Is that's the case then why don't companies voluntarily break up?

people form conglomerates too which typically underperform. I guess it’s some combo of effort/risk? Collect a monopoly rent rather than take greater risk? Your question is not unknown to economists and there is no clear answer.

Another possibility is an agency problem, where the company management is doing what's best for themselves rather than best for shareholders. (Just an idea, I don't know whether that's actually the case.)

Re: Market Concentration Is Threatening the US Economy

#24

Post by sleepysysadmin » Wed, Mar 13, 2019, 4:35 PM UTC

dv_dt wrote: post #10

sleepysysadmin wrote: post #8

The fundamental title and premise of the article is quite inaccurate. https://tcdata360.worldbank.org/indicators/hh.mkt?country=BR... Clearly market concentration has been going DOWN worldwide since 1988. It's important to get your basics correct.

The linked index is described as "Hirschman Herfindahl index is a measure of the dispersion of trade value across an exporter's partners." Can you expand on how this index relates to market concentration in general, or within a single nation like the US?

https://en.wikipedia.org/wiki/Herfindahl_index

Named after economists Orris C. Herfindahl and Albert O. Hirschman, it is an economic concept widely applied in competition law, antitrust[1] and also technology management.

The article thoroughly discussed competition and antitrust.

I have not missed the mark on the subject.

Re: Market Concentration Is Threatening the US Economy

#25

Post by bwanab » Wed, Mar 13, 2019, 4:35 PM UTC

sleepysysadmin wrote: post #8

The fundamental title and premise of the article is quite inaccurate. https://tcdata360.worldbank.org/indicators/hh.mkt?country=BR... Clearly market concentration has been going DOWN worldwide since 1988. It's important to get your basics correct.

At the risk of "appeal to authority", I'm going submit that Stiglitz is a Nobel Prize winner in economics. My guess is that he's got his bases pretty well covered.

Re: Market Concentration Is Threatening the US Economy

#26

Post by ameister14 » Wed, Mar 13, 2019, 4:39 PM UTC

40acres wrote: post #6

gumby wrote: post #2

The irony of monopoly is that when broken upmitntypically benefits the former monopoly parts. Rockefeller Made more money after being broken up than he had as a monopolist. AT&T has underperformed since being reassembled from its post-breakup pieces, which had flourished with competition.

This is a side effect that I'm willing to deal with. The problem with monopoly is not so much about the concentration of individual wealth in my mind, it's about the lack of competition between companies which make investment in R&D and innovation less of a factor to success. Rockefeller rightfully became more wealthy when he owned a large portion of stock in very successful, but highly competitive companies, as oppo…

It's also interesting that when Rockefeller dominated the oil market and standardized it, the price of kerosene dropped dramatically. Rather than monopoly being negative for consumers, the competition had actually driven up prices and lowered quality standards as competitors sabotaged eachother

Re: Market Concentration Is Threatening the US Economy

#27

Post by ameister14 » Wed, Mar 13, 2019, 4:47 PM UTC

sleepysysadmin wrote: post #8

The fundamental title and premise of the article is quite inaccurate. https://tcdata360.worldbank.org/indicators/hh.mkt?country=BR... Clearly market concentration has been going DOWN worldwide since 1988. It's important to get your basics correct.

Your link is talking about Market concentration in terms of total US imports and exports. It's possible for the HHI to be low in global terms if the US is importing/exporting to a variety of partners even if the production of goods is concentrated in few hands.

So yes, this measure of market concentration has been going down worldwide as globalization increased partnerships between countries, but in this case the HHI index you're referring to isn't measuring microeconomic domestic competition, it's talking about international competition on a macro scale, treating countries as the inputs.

Re: Market Concentration Is Threatening the US Economy

#28

Post by maxxxxx » Wed, Mar 13, 2019, 4:48 PM UTC

anoncoward111 wrote: post #20

lotsofpulp wrote: post #9

This is the inevitable result of efficiencies of scale. With computers, databases, instant communications, why would a business be restricted in anyway to expand as far as it can once it has perfected whatever it is selling. In the long run, it would be beneficial for all consumers to be able to select from multiple sellers, but in the short term, it's beneficial for each consumer to purchase from the whomever is giv…

This is why junk yards and small businesses are a true blessing. I can pay someone $500 to put a $1000 engine into my car and get another 100,000 miles out of it, rather than "sorry that's not allowed, please go to the dealership and buy a new car". In some countries, said behavior is literally illegal or impractical. Killing small business would be the death of capitalism and freedom.

"Killing small business would be the death of capitalism and freedom."

Capitalism and capitalists would be fine. They would just operate in a non-competitive market. Which is preferred anyway once you have a dominant market position.

Re: Market Concentration Is Threatening the US Economy

#29

Post by lotsofpulp » Wed, Mar 13, 2019, 4:49 PM UTC

anoncoward111 wrote: post #20

lotsofpulp wrote: post #9

This is the inevitable result of efficiencies of scale. With computers, databases, instant communications, why would a business be restricted in anyway to expand as far as it can once it has perfected whatever it is selling. In the long run, it would be beneficial for all consumers to be able to select from multiple sellers, but in the short term, it's beneficial for each consumer to purchase from the whomever is giv…

This is why junk yards and small businesses are a true blessing. I can pay someone $500 to put a $1000 engine into my car and get another 100,000 miles out of it, rather than "sorry that's not allowed, please go to the dealership and buy a new car". In some countries, said behavior is literally illegal or impractical. Killing small business would be the death of capitalism and freedom.

Which behavior is illegal? Consumers are choosing to patronize businesses that offer them the benefits of efficiencies of scale.

Re: Market Concentration Is Threatening the US Economy

#30

Post by Spartan-S63 » Wed, Mar 13, 2019, 4:51 PM UTC

lotsofpulp wrote: post #9

This is the inevitable result of efficiencies of scale. With computers, databases, instant communications, why would a business be restricted in anyway to expand as far as it can once it has perfected whatever it is selling. In the long run, it would be beneficial for all consumers to be able to select from multiple sellers, but in the short term, it's beneficial for each consumer to purchase from the whomever is giv…

I think what it comes down to is the appropriate amount and type of regulation that suits the market. As market concentration happens, those corporations must necessarily become more regulated to ensure consumer choice and employee rights.

The less concentrated the market, the less regulation required because natural market forces will have larger impacts. Once a corporation reaches a significant size, they largely outgrow the market being able to influence them in a large way, hence the need for more (and stricter) regulation.

Monopolies, if well-regulated, aren't as evil as they seem.