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#61
09-25-2007, 10:04 AM
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Re: Monopolies wouldn\'t exist in the free market?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] [ QUOTE ] The bad sort of monopoly isn't achieved by undercutting or making a better product, it's achieved by buying up all other providers of that product and then price gouging. This is a hobby of mine in the World of Warcraft auction house. [/ QUOTE ] Luckily it doesn't work in the real world. "Predatory pricing" is the Unicorn of economics. There's a lot of mythology written about it, but nobody has ever observed it. [/ QUOTE ] i also just realized that this logic is quite strange. 1) predatory pricing doesn't work in the real world. i know this because predatory pricing has never been observed. 2) regulators around the globe are created and tasked with eliminating monopolies and prevent predatory pricing. oops...see that. bad logic. non-observance of predatory pricing cannot be attributed to its inability to work in the real world. in fact, you could just as logically argue that the lack of observance of predatory pricing is the result of the regulatory agencies doing a great job. we should give those guys awards. in addition, there are instances where the predatory pricing (or predatory actions by would be monopolists) were struck down by regulatory agencies. thus we never observed the predatory pricing, but we did observe something that would have very likely led to it. [/ QUOTE ] What? The regulators are pre-emptively punishing companies *before* they commit these pricing crimes? [/ QUOTE ] no. their mandate is to prevent companies from being in a position to commit "these pricing crimes." therefore not observing "these pricing crimes" can also be linked, in part, to the regulators doing their job, not solely to the implausability of predatory pricing. that is what i pointed out is wrong with your argument. [ QUOTE ] [ QUOTE ] take microsoft vs. netscape et al. microsoft was barred from its practices by the US regulatory agency. if allowed to continue, do you really think another software company could have even come close to competing with MSFT (given that they would program their world standard operating system to not work with other manufacturer's products?) ? do you think MSFT wouldn't be a monopoly? or not have the ability to price preditorially? [/ QUOTE ] LOL. Another company could compete by delivering a product that gave consumers more value for their money, just like in every other industry. [/ QUOTE ] how could another company compete when a vast standard is set and too many businesses, schools, other users are linked to the dominant standard AND programs can be attacked from within that standard? apple is by FAR a better technology than microsoft. but who has the dominant share? there are some die hard apple users, sure, but overall, microsoft developed the standard and now have a monopoly, despite apple having a far better product that gives consumers more value for their money. the barrier apple can't cross is that so many people are using microsoft that they can't get that foothold. clearly the product isn't the end all here. the monopoly has power beyond consumer demand for product. so your statement above is pretty wrong imo in this case. [ QUOTE ] Natural barriers to entry are lower in software than in any other market. [/ QUOTE ] yes, which makes microsoft's monopoly with an inferior product all the more powerful a case. [ QUOTE ] Why should any company be forced to make their products work with anyone else's product? [/ QUOTE ] they shouldn't. i agree 100%. but if a regulator exists to prevent monopolies from engaging in monopolist acts that hurt the consumer, then that is something they have to deal with (assuming you give regulators that mandate). [ QUOTE ] The microsoft antitrust case is one of the MOST blatant examples of the use of such antitrust legislation as a weapon weilded by politically-connected companies against more successful competitors. [/ QUOTE ] can you cite, explain, or back this up because i'm not currently aware of how this played out as you said. Barron 
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#62
09-25-2007, 10:12 AM
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Re: Monopolies wouldn\'t exist in the free market?
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[ QUOTE ] Windows is not MSFT's only product. [/ QUOTE ] And pretty much every MSFT product competes with free software. [/ QUOTE ] Only in the sense that Segway competes with Ford.
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#63
09-25-2007, 10:19 AM
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Re: Monopolies wouldn\'t exist in the free market?
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[ QUOTE ] [ QUOTE ] That is not the logic why Borodog doesn't think predatory pricing would never work. Predatory pricing doesn't work because: 1. It requires a business to run at a loss for a (long?) period of time. This is obviously awful for businesses who consider it and good for consumers. not true. You just need to be able to have a lower cost of goods than your competitors and make sure THEY don't make a profit. 2. If a firm actually does manage to run its competitors out of business, the high price level (and profits possible in that industry) will encourage other firms to compete with it. Again, bad for the firm trying it, good for consumers. Not when they know that as soon as they come in, the prices will drop and no profit will be made, and they lost any investment they had in getting to market 3. When a firm goes through stage one, if it is publicly owned and traded, it can be short sold by the general public. This, combined with the whole "running a loss for an indeterminate amount of time" thing are probably why firms don't try this strategy.assumes that they take a loss. Or, there might not be any examples of predatory pricing because government regulation prevented them all. Pretty obvious what side to bet on here IMO... [/ QUOTE ] [/ QUOTE ] Your counterarguments as laid out here seem to suggest that the "predator" is actually just winning the competition. Are you really saying that when one company is able to get all the business by offering lower costs to consumers at lower profit to them, that's bad for consumers? This seems to run counter to your example of Delta, which you've asserted is charging higher prices to consumers than it otherwise could, and I infer is making an "unfairly high" profit, not a reduced profit. [/ QUOTE ] Absolutely not. When someone tries to come into town, they lower prices on any competing flights. I am not sure if they lose money or make money on these flights. Since they already have all the benefits of having a hub stationed in Cincinnati, their costs of business are going to be lower than the competitor, so if the competitor is making a profit on the route, Delta will make just as much at a cheaper price. As soon as the competitor is gone, they are able to put the prices back up to a much higher level. I've seen it many times. Its very good for the consumer WHEN the competitor tries to come in. However, they haven't come in in a long time. The entire Cincy airport is Delta, Comair (owned by Delta), partner 50 seater planes (Northwest Express, Continental Express), and a handful of American 50 seater planes. This is why the prices are the HIGHEST in the country for no reason other than there is no competition and Delta has the stranglehold to squeeze customers. Driving 2 hours to fly out of another airport to fly back into the same airport in order to get a reasonable fare doesn't seem like the consumer winning to me.
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#64
09-25-2007, 10:21 AM
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Re: Monopolies wouldn\'t exist in the free market?
[ QUOTE ]
[ QUOTE ] 3. When a firm goes through stage one, if it is publicly owned and traded, it can be short sold by the general public. This, combined with the whole "running a loss for an indeterminate amount of time" thing are probably why firms don't try this strategy.assumes that they take a loss. [/ QUOTE ] Worst counter-argument ever. Isn't the definition of predatory pricing selling below cost, aka, losing money? [/ QUOTE ] If it is, its a poor definition. As long as you are selling below competitors costs, it has the exact same effect.
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#65
09-25-2007, 10:23 AM
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Re: Monopolies wouldn\'t exist in the free market?
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[ QUOTE ] Worst counter-argument ever. Isn't the definition of predatory pricing selling below cost, aka, losing money? [/ QUOTE ] This isnt what we are worried about though, we are worried about the monopoly pricing that will eventually come in the future. I think the inherant problem with the predatory pricing arguement is that its generally much harder to put people out of business than it is for businesses to open up shop. So you end up taking losses for longer than you are going to benefit from monopoly pricing. I have yet to see a convincing example of real world predatory pricing, and if it were economically viable its something we'd see a lot more of. [/ QUOTE ] Look harder- http://forumserver.twoplustwo.com/sh...age=0&vc=1
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#66
09-25-2007, 10:40 AM
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Re: Monopolies wouldn\'t exist in the free market?
Are you just pointing out things you see as predatory pricing or are you saying someone should use force to stop these things from happening?
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#67
09-25-2007, 10:45 AM
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Re: Monopolies wouldn\'t exist in the free market?
[ QUOTE ]
[ QUOTE ] What? The regulators are pre-emptively punishing companies *before* they commit these pricing crimes? [/ QUOTE ] no. their mandate is to prevent companies from being in a position to commit "these pricing crimes." therefore not observing "these pricing crimes" can also be linked, in part, to the regulators doing their job, not solely to the implausability of predatory pricing. that is what i pointed out is wrong with your argument. [/ QUOTE ] How do you prevent companies from "being in a postion to commit these pricing crimes" without taking action against them before they've done something "wrong". While we're at it, please explian to me the question that's been begged in this entire thread: what exactly is "wrong" about asking $X for product Y? If your cost of production is $100, it's OK to ask $101 for product Y. But suddenly, if your cost of production is $99, it's bad to ask $101 for the same exact product? Please explain to me why it matters how much I'm making or losing on the transaction. The buyer either finds the product worth the asking price or he doesn't. And please explain what's "good" about price gouging/predatory pricing laws that's different from "bad" price celings/price floors. [ QUOTE ] how could another company compete when a vast standard is set and too many businesses, schools, other users are linked to the dominant standard AND programs can be attacked from within that standard? [/ QUOTE ] It's not my problem to come up with a better business model for would-be competitors. [ QUOTE ] apple is by FAR a better technology than microsoft. [/ QUOTE ] Opinion. The hardware required to run MacOS, FWIW, is significantly more expensive than the hardware that runs windows. And apple has a "monopoly" on that hardware. [ QUOTE ] but who has the dominant share? [/ QUOTE ] Are we talking operating systems here? Because it really doesn't matter who has the most share when you're talking about "programs being attacked" or whatever babble you're slinging above. MacOS users can interoperate just fine with windows users. You can see the same websites, open and edit the same documents. There's no huge barrier. Not that it would matter if there were. [ QUOTE ] there are some die hard apple users, sure, but overall, microsoft developed the standard and now have a monopoly, despite apple having a far better product that gives consumers more value for their money. [/ QUOTE ] Wow, you can determine how much something is worth to someone else? If you can do this, we might as well pack up the market for everything and just let you centrally controll the entire economy. There's probably a nobel prize in here somewhere for you if you can actually do this. [ QUOTE ] [ QUOTE ] Natural barriers to entry are lower in software than in any other market. [/ QUOTE ] yes, which makes microsoft's monopoly with an inferior product all the more powerful a case. [/ QUOTE ] How? If you agree that the natural barriers are low, HOW are they holding this "monopoly"? You agreeing that the barriers are low and then saying they have a monopoly is self-contradictory. [ QUOTE ] [ QUOTE ] Why should any company be forced to make their products work with anyone else's product? [/ QUOTE ] they shouldn't. i agree 100%. but if a regulator exists to prevent monopolies from engaging in monopolist acts that hurt the consumer, then that is something they have to deal with (assuming you give regulators that mandate). [/ QUOTE ] They shouldn't, but they should? Which is it? [ QUOTE ] [ QUOTE ] The microsoft antitrust case is one of the MOST blatant examples of the use of such antitrust legislation as a weapon weilded by politically-connected companies against more successful competitors. [/ QUOTE ] can you cite, explain, or back this up because i'm not currently aware of how this played out as you said. [/ QUOTE ] http://www.mises.org/freemarket_detail.aspx?control=346
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#68
09-25-2007, 10:47 AM
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Re: Monopolies wouldn\'t exist in the free market?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] 3. When a firm goes through stage one, if it is publicly owned and traded, it can be short sold by the general public. This, combined with the whole "running a loss for an indeterminate amount of time" thing are probably why firms don't try this strategy.assumes that they take a loss. [/ QUOTE ] Worst counter-argument ever. Isn't the definition of predatory pricing selling below cost, aka, losing money? [/ QUOTE ] If it is, its a poor definition. As long as you are selling below competitors costs, it has the exact same effect. [/ QUOTE ] It's OK to save consumers money, but only if you're making some money. But not too much, then you're price gouging. And we don't have any objective measures for any of this, it's just a matter of whether we like you or not. So watch out.
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#70
09-25-2007, 10:58 AM
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Re: Monopolies wouldn\'t exist in the free market?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] What? The regulators are pre-emptively punishing companies *before* they commit these pricing crimes? [/ QUOTE ] no. their mandate is to prevent companies from being in a position to commit "these pricing crimes." therefore not observing "these pricing crimes" can also be linked, in part, to the regulators doing their job, not solely to the implausability of predatory pricing. that is what i pointed out is wrong with your argument. [/ QUOTE ] How do you prevent companies from "being in a postion to commit these pricing crimes" without taking action against them before they've done something "wrong". [/ QUOTE ] it isn't punishing them if the regulations (i.e. the law) are structured such that the actions fall afowl of it. that isn't punishing, that is insuring adherence. [ QUOTE ] While we're at it, please explian to me the question that's been begged in this entire thread: what exactly is "wrong" about asking $X for product Y? [/ QUOTE ] nothing. all i'm saying is that predatory pricing is possible. i'm not for regulation, i'm havn't stated an opinion on that fact at all other than to question why it would be necessary if predatory pricing couldn't happen. [ QUOTE ] If your cost of production is $100, it's OK to ask $101 for product Y. [/ QUOTE ] it's also OK to ask for $5 if you want to lose money. you can do whatever you want. all i'm talking about is the existance of predatory pricing. [ QUOTE ] But suddenly, if your cost of production is $99, it's bad to ask $101 for the same exact product? [/ QUOTE ] um, no it isn't. [ QUOTE ] Please explain to me why it matters how much I'm making or losing on the transaction. The buyer either finds the product worth the asking price or he doesn't. [/ QUOTE ] when did you get the idea that i'm for the regulation? [ QUOTE ] And please explain what's "good" about price gouging/predatory pricing laws that's different from "bad" price celings/price floors. [/ QUOTE ] nothing. i haven't ever said i'm for the laws. [ QUOTE ] [ QUOTE ] how could another company compete when a vast standard is set and too many businesses, schools, other users are linked to the dominant standard AND programs can be attacked from within that standard? [/ QUOTE ] It's not my problem to come up with a better business model for would-be competitors. [ QUOTE ] apple is by FAR a better technology than microsoft. [/ QUOTE ] Opinion. The hardware required to run MacOS, FWIW, is significantly more expensive than the hardware that runs windows. And apple has a "monopoly" on that hardware. [ QUOTE ] but who has the dominant share? [/ QUOTE ] Are we talking operating systems here? Because it really doesn't matter who has the most share when you're talking about "programs being attacked" or whatever babble you're slinging above. MacOS users can interoperate just fine with windows users. You can see the same websites, open and edit the same documents. There's no huge barrier. Not that it would matter if there were. [ QUOTE ] there are some die hard apple users, sure, but overall, microsoft developed the standard and now have a monopoly, despite apple having a far better product that gives consumers more value for their money. [/ QUOTE ] Wow, you can determine how much something is worth to someone else? If you can do this, we might as well pack up the market for everything and just let you centrally controll the entire economy. There's probably a nobel prize in here somewhere for you if you can actually do this. [ QUOTE ] [ QUOTE ] Natural barriers to entry are lower in software than in any other market. [/ QUOTE ] yes, which makes microsoft's monopoly with an inferior product all the more powerful a case. [/ QUOTE ] How? If you agree that the natural barriers are low, HOW are they holding this "monopoly"? You agreeing that the barriers are low and then saying they have a monopoly is self-contradictory. [ QUOTE ] [ QUOTE ] Why should any company be forced to make their products work with anyone else's product? [/ QUOTE ] they shouldn't. i agree 100%. but if a regulator exists to prevent monopolies from engaging in monopolist acts that hurt the consumer, then that is something they have to deal with (assuming you give regulators that mandate). [/ QUOTE ] They shouldn't, but they should? Which is it? [ QUOTE ] [ QUOTE ] The microsoft antitrust case is one of the MOST blatant examples of the use of such antitrust legislation as a weapon weilded by politically-connected companies against more successful competitors. [/ QUOTE ] can you cite, explain, or back this up because i'm not currently aware of how this played out as you said. [/ QUOTE ] http://www.mises.org/freemarket_detail.aspx?control=346 [/ QUOTE ] alright, another link from mises. i've yet to see you or borodog link from a cite that isn't associated with that. from another thread i asked and never got that question answered, maybe you can do it. can you provide a link that doesn't come from mises? i'm just asking to link from an independent source (i.e. an academic journal, independent publication etc.). anyways, i'll come back to the block of quote above later. gotta jet. Barron
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