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Economic Termites: Monopolies not noticeable enough for most of us

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Re: Economic Termites: Monopolies not noticeable enough for most of us

#321

Post by AnimalMuppet »

CPLX wrote: post #313
AnimalMuppet wrote: post #298

Earlier quoted context omitted.

I think you could (almost) build a consistent picture: Economic output is doing well, a lot of people are working, but the rich are taking all the gains and the workers are just barely surviving. The problem is, if that's the case, who's buying all the output? It's not just going into warehouses. So people must be able to buy all this stuff. An alternate view would be that people have been buying all this stuff, most…

> I think you could (almost) build a consistent picture: Economic output is doing well, a lot of people are working, but the rich are taking all the gains and the workers are just barely surviving. You figured it out. Maybe replace "the rich" with "those with capital and market power" but that's mostly a distinction without a difference.

Could you now address the objection? If that's the case, who's buying all the output?

Re: Economic Termites: Monopolies not noticeable enough for most of us

#322

Post by roenxi »

Animats wrote: post #211

Four. That's the magic number. There have to be four competitors of significant size before prices go down. There are both EU and US studies substantiating this. It's been seen in cellular phone networks, ISPs, drugstores, and banks. Drop below the threshold of four, and the magic happens. Prices go up, margins go up, and consumers lose. Four should be the basis of antitrust policy. Less than four, and there are two…

> Four should be the basis of antitrust policy. Less than four, and there are two options - break up, or become a regulated public utility.

3 options; usually monopolies are matched by regulatory constraints making competition expensive. Removing the barriers to other firms entering the market is always an option.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#323

Post by primax »

mensetmanusman wrote: post #279
Animats wrote: post #211

Four. That's the magic number. There have to be four competitors of significant size before prices go down. There are both EU and US studies substantiating this. It's been seen in cellular phone networks, ISPs, drugstores, and banks. Drop below the threshold of four, and the magic happens. Prices go up, margins go up, and consumers lose. Four should be the basis of antitrust policy. Less than four, and there are two…

How many more humans would be needed to support 4 of every company type?

The same amount.

The 4 companies are competing for their share of the existing business

Re: Economic Termites: Monopolies not noticeable enough for most of us

#324

Post by HWR_14 »

roenxi wrote: post #322
Animats wrote: post #211

Four. That's the magic number. There have to be four competitors of significant size before prices go down. There are both EU and US studies substantiating this. It's been seen in cellular phone networks, ISPs, drugstores, and banks. Drop below the threshold of four, and the magic happens. Prices go up, margins go up, and consumers lose. Four should be the basis of antitrust policy. Less than four, and there are two…

> Four should be the basis of antitrust policy. Less than four, and there are two options - break up, or become a regulated public utility. 3 options; usually monopolies are matched by regulatory constraints making competition expensive. Removing the barriers to other firms entering the market is always an option.

I'm not sure of many, if any, monopolies where regulatory constraints are the cause. Especially compared to causes like network effects. Do you have a modern example?

I can think of a couple of examples where regulations exist to manage other constraints on competition, like the FCC regulating the spectrum. But not where the regulations cause the number of major competitors to decrease dramatically.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#325

Post by saulpw »

cjblomqvist wrote: post #300
saulpw wrote: post #288

Earlier quoted context omitted.

None, if each of the companies were 1/4 of the size.

Not necessarily true. Economies of scale is a thing.

Up to a point. Beyond that point, "economies of scale" becomes "monopolies of scale". Which is Stoller's (and the OP's) point.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#326

Post by Animats »

gruez wrote: post #259
Animats wrote: post #211

Four. That's the magic number. There have to be four competitors of significant size before prices go down. There are both EU and US studies substantiating this. It's been seen in cellular phone networks, ISPs, drugstores, and banks. Drop below the threshold of four, and the magic happens. Prices go up, margins go up, and consumers lose. Four should be the basis of antitrust policy. Less than four, and there are two…

>That's the magic number. There have to be four competitors of significant size before prices go down. There are both EU and US studies substantiating this. source?

"Entry and Competition in Concentrated Markets" [1]

This is a paper from 1991, from some economists at Stanford. They say the key number is between 3 and 5. This was a study of smaller businesses in small towns - doctors, dentists, druggists, plumbers, and tire dealers.

"Competition Policy Brief (2021)" An EU study.[2] This is much more of a macro study.

"How European Markets Became Free: A Study of Institutional Drift"[3] This one compares US and EU antitrust policy changes over time, especially for telecom and airlines.

There's overall agreement that trouble begins below 5 competitors.

[1] https://www.its.caltech.edu/~mshum/gradio/papers/bresreiss_j...

[2] https://competition-policy.ec.europa.eu/system/files/2021-12...

[3] http://germangutierrezg.com/GutierrezPhilippon_Europe_2020.p...

Re: Economic Termites: Monopolies not noticeable enough for most of us

#327

Post by Manuel_D »

WalterBright wrote: post #280
fire_lake wrote: post #256

Earlier quoted context omitted.

- they compete with local taxi firms - they compete with other modes of transport - prices have risen substantially after the VC land grab tailed off

[flagged]

...when the government legislated pay is over $26 per hour. Plenty of business would see higher prices with business-specific pay legislation mandating pay substantially higher than minimum wage.

Re: Economic Termites: Monopolies not noticeable enough for most of us

#328

Post by elliotto »

bequanna wrote: post #285
gwd wrote: post #269

Earlier quoted context omitted.

> “Generational wealth” is generally a myth. The second and third generations burn through any inheritance and sprint back to middle class rather quickly. Ref? That was definitely not my impression from listening to "Capital in the 21st Century".

Piketty is not my favorite. I consider him a pure academic who tends to cherry pick data. In reality, wealth tends to cluster around people who are good stewards of it. They allocate capital efficiently and we are all better off. The government is NOT a good steward of wealth. They allocate inefficiently (because no accountability) so we should minimize what we give them. Here is a quick and dirty reference discussin…

This is wild to disagree with Pikettys magnum opus with a reference to a yahoo finance news article

Re: Economic Termites: Monopolies not noticeable enough for most of us

#329

Post by TheJoeMan »

smsm42 wrote: post #157

I am wondering about the Autodesk example. If they suck so much and the users hate them so much, why no competition have arisen? Are there some government induced barriers? We saw Microsoft has been an unassailable incumbent on browser market, OS market, personal computing market, etc. And yet, their perceived monopoly has been successfully attacked. It took big companies like Google and Apple and IBM, but it turned…

For starters the silicon valley types keep pitching cloud-only webbrowser-based tech stacks. Ex. for mechanical design OnShape et. al. Actually Solidworks is trying to push to web-based which few want…

Re: Economic Termites: Monopolies not noticeable enough for most of us

#330

Post by jmyeet »

WalterBright wrote: post #284
jmyeet wrote: post #276

Earlier quoted context omitted.

Speaking generally, not to you specifically, it seems like a ton of people see the problems created by capitalism and decide the solution is even more capitalism . I don't think there's a magical number of competitors that fixes things. We see an interesting phenomenon in commercial landlords where we have a ton of players but they all use the same software [1], which creates an effective monopoly even though it's no…

> It's just not feasible or economical to have 4+ broadband networks being built in an area Actually, it is. When telephone systems were invented, lots of telephone companies sprang up and ran wires everywhere. The barrier to this happening with broadband is regulation. Regulators work hard to ensure there is no broadband competition. > it seems like a ton of people see the problems created by capitalism and decide t…

Let's say it costs $1000 to bring fiber to each household in a given network build. The take up rate might be 35%. That is 35% of connected households become customers. Well that customer has to recoupe $3000 to pay for that build.

Now imagine there are 2 last mile networks. The take up rate hasn't changed. If they cost the same then each customer has to recoup $6000.

Network overbuilds make absolutely no sense.

Government programs don't fail per se. They're designed to fail by underfunding them or adding layers of administration (eg state block grants to replace direct Federal funding) and then that failure is used to justify more cuts. It's called starving the beast [1].

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

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