# Think Tank > Austrian Economics / Economic Theory >  Antitrust Law - Needed or Not?

## Slutter McGee

I did a few searches before starting this thread, and while there seem to be a few threads in the past it has been several years, so I thought I would start a new general discussion on this topic.

I think we have come a long way in antitrust regulation since its inception. An understanding that large marketshare is not necessarily a bad thing, especially when it is a result of innovation is far more prevalent. Some logical price fixing schemes have even been allowed with an efficiency argument. Robinson Patman still needs to be repealed, but it is largely ignored by the DOJ.

While there have certainly been a lot of bad Supreme Court decisions and laws passed, it seems that enforcement of these regulations is getting more reasonable. At the same time other regulation has created more barriers to entry and retrained competition. So I just wanted to get yalls opinion on Price Fixing, Monopoly, Oligopoly, Mergers, Cartels, and anything to with this subject.

It seems to be a subject that a lot of libertarians are split on.

Slutter McGee

EDIT: Honestly, I enjoy studying IO theory more than policy decisions. If anyone wants to talk micro I'd enjoy it.

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## presence

Anti Trust would be a non issue without licensing schemes and patent protection rackets.

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## green73

The Crushing Case Against Antitrust: Tom DiLorenzo on the Tom Woods Show



Monopoly, Competition, and Antitrust - Tom Dilorenzo

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## helmuth_hubener

Needed or Not?

Nah, not needed.  Doesn't help anyone.  I prefer the alternative:

Let anyone 

buy anything 

from anyone they choose.

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## green73

> Needed or Not?
> 
> Nah, not needed.  Doesn't help anyone.  I prefer the alternative:
> 
> Let anyone 
> 
> buy anything 
> 
> from anyone they choose.


Did it ever help?

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## acptulsa

Anti-trust laws were another reaction 'solution' to another problem created by government.  Teddy Roosevelt used to bust the trusts that didn't contribute to his campaigns.  As is evidenced by the fact that he didn't split Harriman's Union Pacific and Southern Pacific Railroads until his second term.

Yes, it's nice to be able to take those who engage in monopolistic practices (like Microsoft) to court, and a few carefully crafted laws can assist with that.  But in practice, government still creates more monopolies than it breaks up.

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## Lucille

Chapter XVI (Page 172):  https://mises.org/sites/default/file...0Machine_2.pdf

Denninger has had a lot to say about antitrust laws that the Medical Industrial Complex is allowed to violate with impunity (Sherman, Clayton, and Robinson-Patman). Most recently:  http://market-ticker.org/akcs-www?singlepost=3373278

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## helmuth_hubener

> Did it ever help?


It was pushed through by big business (esp. railroad) would-be cartelizers, because they _thought_ it would help _them_.  They couldn't set up stable cartels on the market, because there were just too many factors that kept upsetting the apple cart.  The mis-nomered "anti"-trust laws setting up the Interstate Commerce Commission and etc. did help them to be able to finally raise barriers to entry and succeed to some extent in cartelizing things, is my understanding.  Now did they actually *help* them, overall, long-term?  Subjective, but I would say *no.*

Here's a nice lecture on all this from Murray Rothbard, extremely informative:

Scrap that, here's something much shorter that someone helpful has put up for us:

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## Ronin Truth

NOT!

https://www.google.com/search?hl=en&...21.dbtP0uQuitg

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## Slutter McGee

Alright, so what about price fixing? This was a huge issues in vitamins, citric acid, and lycine. We can all here agree that big does not necessarily equal bad. But there have been issues of cartels forming that are not government mandated or created. 

These hurt competition. They don't foster innovation, and fixed cost are so high for some of these industries that barriers to entry exist even without additional government regulation.

Slutter McGee

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## Slutter McGee

> Chapter XVI (Page 172):  https://mises.org/sites/default/file...0Machine_2.pdf
> 
> Denninger has had a lot to say about antitrust laws that the Medical Industrial Complex is allowed to violate with impunity (Sherman, Clayton, and Robinson-Patman). Most recently:  http://market-ticker.org/akcs-www?singlepost=3373278


But a large part of those 3 laws are horrible. Robinson Patman is universally condemned as it should be. Clayton did some stupid crap with tying products to other products and Price Discrimination. Exclusive Dealing could be up for a little bit more debate as well as mergers. And Sherman was so vague that all kinds of stupid crap came from it.

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## Ronin Truth

> Alright, so what about price fixing? This was a huge issues in vitamins, citric acid, and lycine. We can all here agree that big does not necessarily equal bad. But there have been issues of cartels forming that are not government mandated or created. 
> 
> These hurt competition. They don't foster innovation, and fixed cost are so high for some of these industries that barriers to entry exist even without additional government regulation.
> 
> Slutter McGee


Antitrust laws made it illegal to charge more, less, or the same as the competition, as I understand it.

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## The Gold Standard

Government involvement is the only way a monopoly can exist.

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## The Gold Standard

> Alright, so what about price fixing? This was a huge issues in vitamins, citric acid, and lycine. We can all here agree that big does not necessarily equal bad. But there have been issues of cartels forming that are not government mandated or created. 
> 
> These hurt competition. They don't foster innovation, and fixed cost are so high for some of these industries that barriers to entry exist even without additional government regulation.
> 
> Slutter McGee


Then get in the citric acid and lysine business. Or make it known that their price fixing is propping up the price of those things. Someone else will come in and get a piece of that pie.

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## acptulsa

> Government involvement is the only way a monopoly can exist.


No.

Government makes it far more likely that a monopoly will exist, but it isn't the one and only way it can happen.

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## kcchiefs6465

> Alright, so what about price fixing? This was a huge issues in vitamins, citric acid, and lycine. We can all here agree that big does not necessarily equal bad. But there have been issues of cartels forming that are not government mandated or created. 
> 
> These hurt competition. They don't foster innovation, and fixed cost are so high for some of these industries that barriers to entry exist even without additional government regulation.
> 
> Slutter McGee


Barriers to entry exist with regards to any entrepreneurial endeavor. Are they natural barriers or government created and enforced barriers?

Anti-trust laws are some of the most politically motivated and arbitrary laws to date. They establish trusts, even going so far as forcing every single one within this country to accept a piece of paper at current value for debts past or present, then have the nerve to offer a "solution." Even if trusts were an issue, one need not look too far to see that the USG does not have the American public's interests at heart and instead it operates under a system of crony capitalism and theft.

No matter how a business operates a case could be made that they are acting in a monopolistic manner. There are natural mechanisms in place that would largely prevent the 'cartelization' of various industries. That is, without government granted privileges and special favors.

It has been a while since I've read up on the subject but Tom Woods, Jr. has a lot of convincing stuff out there, Tom DiLorenzo has done a lot of work with regards to this issue, and Andrew Napolitano has written about various ridiculous cases of Congressional violation with regards to this in a few of his books.

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## kcchiefs6465

> No.
> 
> Government makes it far more likely that a monopoly will exist, but it isn't the one and only way it can happen.


Most of the common examples cited are absurd and illogical.

"Well what if this company lowers their prices to extreme lows, saturates the market, buys up the competition, and then raises their prices once they've established a monopoly?"

I don't think these people really stop and think about what they say, or rather, what they are worried about, before speaking. That and they simply regurgitate progressive propaganda about robber barons, the horrors of capitalism, etc.

Too low of prices? You are trying to establish a monopoly by way of saturating the market before purchasing the competition. Too high of prices? Well you are exploiting the consumer as well as maintaining the barrier to free entry (to establish a monopoly, of course). No matter which way you cut it, a case for anti-trust litigation could be made.

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## Lucille

> But a large part of those 3 laws are horrible. Robinson Patman is universally condemned as it should be. Clayton did some stupid crap with tying products to other products and Price Discrimination. Exclusive Dealing could be up for a little bit more debate as well as mergers. And Sherman was so vague that all kinds of stupid crap came from it.


I'm not sure that he's a fan of any of them.  He's just saying, apply them to the medical cartel and watch prices drop like a stone.  Why do they refuse?  For whatever reason, low priced medical care and insurance are the last things the ruling class wants.

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## kcchiefs6465

> *The Myth of Predatory Pricing*
> by Thomas J. DiLorenzo
> 
> 
> 
> 
> 
> 			
> 				The attempt to reduce or to eliminate predatory pricing is also likely to reduce or eliminate com petitive pricing beneficial to consumers.
> ...


http://www.cato.org/pubs/pas/pa-169es.html

Much more here: http://www.cato.org/pubs/pas/pa-169.html

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## helmuth_hubener

> Alright, so what about price fixing? This was a huge issue in vitamins, citric acid, and lycine.[T]here have been issues of cartels forming that are not government mandated or created.


Forming, yes.  Actually working for any length of time -- say, more than a year?  I know of no such instance.

If you think that such a thing has happened, let us know the details and we can all look into it.

Myself, I am very, very skeptical.  Everyone in a cartel has a huge incentive to cheat.  Even if none of the companies were to cheat (never has happened, to my knowledge), in addition to that there is always _internal_ cheating as middle managers and salesmen give special deals to increase business to their department or district and help their careers.

Cartels just aren't stable.  Sorry.

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## idiom

What's the point if they aren't enforced at all?

Look at the medical system, it has broad exemptions to all anti-trust law, and all consumer protections, along with huge amounts of government imposed barriers to entry.

Easiest thing in the world to fix, but nobody will touch the source of the problem.

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## cubical

Considering the government is the only entity that can force me to do anything, the only thing anti-trust laws should regulate is the government.

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## green73

> Considering the government is the only entity that can force me to do anything, the only thing anti-trust laws should regulate is the government.


QFT

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## Slutter McGee

> Antitrust laws made it illegal to charge more, less, or the same as the competition, as I understand it.


Not really. Some states have anti-price gouging laws, which even most keynsian economist will admit is stupid, but its really all about "in restrain of trade" when it comes to anti-trust in the US.

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## Slutter McGee

> Then get in the citric acid and lysine business. Or make it known that their price fixing is propping up the price of those things. Someone else will come in and get a piece of that pie.


I can't. Barrier to entry is way too high. Those cartels went on for years btw.

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## Slutter McGee

[QUOTE=kcchiefs6465;5785962]Barriers to entry exist with regards to any entrepreneurial endeavor. Are they natural barriers or government created and enforced barriers?

Well there are obviously both. Significant barrier to entry makes it far more likely for cartels to form, whether this is artificial or natural. People here seems to have this idea that cartels are going to jack up prices to monopoly level. That is really fun in theory, but it does not happen in reality. Price fixing is harder to recognize in real life. 

My point is pretty simple, I don't see how price fixing can ever be a good thing when significant natural barriers to entry exist: lets ignore government constructed barriers.




> Anti-trust laws are some of the most politically motivated and arbitrary laws to date. They establish trusts, even going so far as forcing every single one within this country to accept a piece of paper at current value for debts past or present, then have the nerve to offer a "solution." Even if trusts were an issue, one need not look too far to see that the USG does not have the American public's interests at heart and instead it operates under a system of crony capitalism and theft.


You are quite right that the FED is a government supported monopoly, but I really don't want to get in discussion about currency, there are a million other threads discussing that particular monopoly. But most anti-trust laws are more arbitrary than politically motivated. Laws creating and supporting cartels are generally not considered anti-trust, as bad as those laws might be. Peanuts, Sugar, etc. 




> No matter how a business operates a case could be made that they are acting in a monopolistic manner. There are natural mechanisms in place that would largely prevent the 'cartelization' of various industries. That is, without government granted privileges and special favors.


The natural mechanism you mean, at least in high barrier entry, is the incentive to cheat. Certainly a grim strategy model is not realistic, but there are certainly also mechanisms for cartels to punish cheaters.




> It has been a while since I've read up on the subject but Tom Woods, Jr. has a lot of convincing stuff out there, Tom DiLorenzo has done a lot of work with regards to this issue, and Andrew Napolitano has written about various ridiculous cases of Congressional violation with regards to this in a few of his books.


There have certainly been a lot (most even) very bad anti-trust laws. I just don't see a good libertarian answer to price fixing....and also patents, which I will discuss later.

Slutter McGee

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## Slutter McGee

> Most of the common examples cited are absurd and illogical.
> 
> "Well what if this company lowers their prices to extreme lows, saturates the market, buys up the competition, and then raises their prices once they've established a monopoly?"
> 
> I don't think these people really stop and think about what they say, or rather, what they are worried about, before speaking. That and they simply regurgitate progressive propaganda about robber barons, the horrors of capitalism, etc.
> 
> Too low of prices? You are trying to establish a monopoly by way of saturating the market before purchasing the competition. Too high of prices? Well you are exploiting the consumer as well as maintaining the barrier to free entry (to establish a monopoly, of course). No matter which way you cut it, a case for anti-trust litigation could be made.


From a macro perspective, you are completely right, actual perfect monopoly does not exist, and large market share does not equal monopoly. Predatory pricing is NOT an issue in the macro economy. Anybody who says it is, well they are probably an idiot. It does cause problems on a more micro level, but it is far easier for other firm to enter a market there. I think we agree on this.

Slutter McGee

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## Slutter McGee

> Forming, yes.  Actually working for any length of time -- say, more than a year?  I know of no such instance.
> 
> If you think that such a thing has happened, let us know the details and we can all look into it.
> 
> Myself, I am very, very skeptical.  Everyone in a cartel has a huge incentive to cheat.  Even if none of the companies were to cheat (never has happened, to my knowledge), in addition to that there is always _internal_ cheating as middle managers and salesmen give special deals to increase business to their department or district and help their careers.
> 
> Cartels just aren't stable.  Sorry.


Vitamin cartel went on for over 10 years. They can be stable, especially if they are international cartels. Look at Hoffman LaRoche

Slutter McGee

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## Slutter McGee

Crap, I know I just responded to every post with a single post of my own. Probably should have combined them. Anyway, enjoying the discussion. I just listened to a live lecture from Israel Kirzner a couple days ago. Fascinating, brilliant, and frustratingly repetitive, but he had no answer for patents. Basically said "I have no $#@!ing idea"...the expletive is my own interpretation. 

Anybody want to help shift this to that subject a little. This is a question that I don't know the answer to either, especially from a free market perspective.

Slutter McGee

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## helmuth_hubener

I looked up Hoffman LaRoche.  I see no evidence that they organized a successful cartel.  It seems that the EU government _did_ see evidence that they (with several other vitamin manufacturers) had a successful cartel.  I am highly skeptical of any conclusions made by the EU government and any things they claim to see or know.  The opposite of whatever they say would tend to be the truth.  

So, again, I see no evidence that they organized a successful cartel. Do you have such evidence?

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## Slutter McGee

> I looked up Hoffman LaRoche.  I see no evidence that they organized a successful cartel.  It seems that the EU government _did_ see evidence that they (with several other vitamin manufacturers) had a successful cartel.  I am highly skeptical of any conclusions made by the EU government and any things they claim to see or know.  The opposite of whatever they say would tend to be the truth.  
> 
> So, again, I see no evidence that they organized a successful cartel. Do you have such evidence?


Google aint that hard.

http://www.justice.gov/atr/public/pr.../1999/2450.htm

Slutter McGee

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## The Gold Standard

> I can't. Barrier to entry is way too high. Those cartels went on for years btw.


Then your complaint is with government restricting entry, not the "cartel". Natural barriers can be overcome if it is worth it to an entrepreneur, and if it isn't worth it then you obviously don't have a monopoly price in the industry.

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## The Gold Standard

> Crap, I know I just responded to every post with a single post of my own. Probably should have combined them. Anyway, enjoying the discussion. I just listened to a live lecture from Israel Kirzner a couple days ago. Fascinating, brilliant, and frustratingly repetitive, but he had no answer for patents. Basically said "I have no $#@!ing idea"...the expletive is my own interpretation. 
> 
> Anybody want to help shift this to that subject a little. This is a question that I don't know the answer to either, especially from a free market perspective.
> 
> Slutter McGee


The answer for patents is easy. They should not exist. It is nothing more than government restricting entry. The idea that entrepreneurs would not have incentive to innovate without them is ridiculous. A true free market isn't the corporate dream many people make it out to be. There is ruthless competition from everywhere. You innovate and find ways to serve the customer if you want to eat. That is plenty of incentive. There are other ways to protect your designs from competitors, and being first to market also has financial advantages. Patents are completely unnecessary.

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## Slutter McGee

> The answer for patents is easy. They should not exist. It is nothing more than government restricting entry. The idea that entrepreneurs would not have incentive to innovate without them is ridiculous. A true free market isn't the corporate dream many people make it out to be. There is ruthless competition from everywhere. You innovate and find ways to serve the customer if you want to eat. That is plenty of incentive. There are other ways to protect your designs from competitors, and being first to market also has financial advantages. Patents are completely unnecessary.


First off, the true free market does not exist. It is fine to look at what would be the case in a completely free market. But we also need to look at the world we live in. FDA approval can cost billions of dollars. We can argue that the FDA shouldn't exist but it does. Without patents for drugs, there is absolutely no reason to develop new drugs because there is zero profit opportunity.

And you can't pretend the question is that simple. Even Von Mises didn't have a good answer for patents.

Slutter McGee

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## kcchiefs6465

> Well there are obviously both. Significant barrier to entry makes it far more likely for cartels to form, whether this is artificial or natural. People here seems to have this idea that cartels are going to jack up prices to monopoly level. That is really fun in theory, but it does not happen in reality. Price fixing is harder to recognize in real life.


I haven't read up on this subject in a while so please forgive my fogginess but every example of price fixing that I can think of was the result, in some form or another, of government interference/corruption.

Would it occur within a free market? Briefly, perhaps.




> My point is pretty simple, I don't see how price fixing can ever be a good thing when significant natural barriers to entry exist: lets ignore government constructed barriers.


Price fixing isn't a good thing. Prices should rise and fall with regards to supply and demand.




> You are quite right that the FED is a government supported monopoly, but I really don't want to get in discussion about currency, there are a million other threads discussing that particular monopoly. But most anti-trust laws are more arbitrary than politically motivated. Laws creating and supporting cartels are generally not considered anti-trust, as bad as those laws might be. Peanuts, Sugar, etc.


Indeed. So then I wonder, who is the decider whether an industry is cartelized?

My point with regards to the Fed is that when a currency is monopolized and its use forced upon a population, then I don't much wish to hear said monopolizers whining about the monopolization of a different, less encompassing, industry. Especially when their track record is disgusting, at best.

If the ironic hypocrites wished to hold any sort of legitimacy with regards to declaring what is and is not a monopoly, they'd abolish the legal tender laws and cease their monopoly over the currency.




> The natural mechanism you mean, at least in high barrier entry, is the incentive to cheat. Certainly a grim strategy model is not realistic, but there are certainly also mechanisms for cartels to punish cheaters.


Can you give me an example of a sector that you would consider to have a high barrier entry completely or relatively absent government interference?

There are reasons that when coupled with a cartel member's incentive to 'cheat' (on the rules of their agreement) that would provide a natural discouragement from monopolies maintaining. One is profit drive. Two is human ingenuity. Without a government using force to enable or even establish these monopolies, the issue really would be a mild one.

As far as cartels punishing cheaters, sure. There would be ways to combat that as well. Public perception being a major one.




> There have certainly been a lot (most even) very bad anti-trust laws. I just don't see a good libertarian answer to price fixing....and also patents, which I will discuss later.
> 
> Slutter McGee


I don't see a logical reason to let the biggest monopoly on the planet decide what is and is not a monopoly. Especially considering that a large portion of their modern existence is effecting a bastardization of trade. They distort (fix) the price on everything simply through their establishment and maintenance of a fiat, mandated currency.

Would price fixing be an issue in the free market? No. Not largely, anyways.

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## Slutter McGee

> I haven't read up on this subject in a while so please forgive my fogginess but every example of price fixing that I can think of was the result, in some form or another, of government interference/corruption.


There have been tons of them. Most don't hold because the incentive to cheat is too high or competition enters into the market. In the short run they are a big deal, though not so big in the long run. But there are tons of examples of price fixing. Just look at what was going on before Sherman. Price fixing was going on in Steel (Basing point pricing), railroads, gun powder, and a host of other businesses...most with high fixed costs and natural barriers to entry.




> Price fixing isn't a good thing. Prices should rise and fall with regards to supply and demand.


Agreed, but one of the bigger issues is the inflationary aspect of price fixing when the product is an intermediate good.




> Indeed. So then I wonder, who is the decider whether an industry is cartelized?


Now that is a loaded question. You can use the Herfindahl Index which is better than most other measures, but that only measures industry concentration of an entire industry. 4 firms of equal size (hypothetically the only 4 in the industry) in a cartel are going to have the same index as 4 firms competing in perfect competition. The index is certainly helpful for showing which industries are more likely for a cartel to form. 

Really the only way to determine that there is definitely a cartel is to find actual evidence of price fixing. Thank God that the idea of tacit collusion is no longer considered evidence of price fixing. Hard to imagine that the Supreme Court once decided prices moving in unison was. 




> My point with regards to the Fed is that when a currency is monopolized and its use forced upon a population, then I don't much wish to hear said monopolizers whining about the monopolization of a different, less encompassing, industry. Especially when their track record is disgusting, at best.


You will hear no disagreement from me when it comes to government sponsored and created cartels. But seeing as they are at this time legal, they fall outside the purview of current anti-trust legislation. 





> Can you give me an example of a sector that you would consider to have a high barrier entry completely or relatively absent government interference?


Mentioned a few earlier. Any industry with an extremely high fixed cost or need for capital is going to have natural barriers. We also have to take time lag into account. An investor might be able to build his own railroad, but until that railroad is actually built, price fixing from a cartel can do considerable damage to the economy in the short run.




> There are reasons that when coupled with a cartel member's incentive to 'cheat' (on the rules of their agreement) that would provide a natural discouragement from monopolies maintaining. One is profit drive. Two is human ingenuity. Without a government using force to enable or even establish these monopolies, the issue really would be a mild one.


There is some fun game theory to get into. I agree with you in the long run monopolies would not be a huge issue in this hypothetical situation. I still think they would cause lots of harm in the relatively short run. But that situation does not currently exist. 

I need to get back to studying but I will try replying to a little more of what you said later.

Slutter McGee

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## The Gold Standard

> First off, the true free market does not exist. It is fine to look at what would be the case in a completely free market. But we also need to look at the world we live in.


Then what the $#@! are you asking for? Patents are never going away. Government sponsored monopolies are never going away. I have no interest in debating the economics of our centrally planned disaster. What is the point? It's like arguing economics in the Soviet Union. I think the government should produce more bread to solve the bread lines. Or kill more people.




> Without patents for drugs, there is absolutely no reason to develop new drugs because there is zero profit opportunity.


So there would not be any money in curing or treating illness? No demand for it? Without patents for drugs they would have to make something that works if they want to make any money.

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## Slutter McGee

> Then what the $#@! are you asking for? Patents are never going away. Government sponsored monopolies are never going away. I have no interest in debating the economics of our centrally planned disaster. What is the point? It's like arguing economics in the Soviet Union. I think the government should produce more bread to solve the bread lines. Or kill more people.


Give me a $#@!ing break. The US is still a market economy. That is a bull$#@! analogy. I enjoy discussing what the world is instead of sitting around talking about what I want it to be. In this world there are policies that are conducive to more liberty and competition, and polices that are not. I find some of the anti-trust issues to be a gray area. Equating breadlines with patents is borderline retarded. 




> So there would not be any money in curing or treating illness? No demand for it? Without patents for drugs they would have to make something that works if they want to make any money.


No, there wouldn't be as much money. Development of drugs can cost billions even without government interference. But these drugs generally have a low marginal cost to actually produce afterwards. If a generic drug producer can simply transfer most of the fixed costs to the larger producer and still enter the market almost immediately after the drug has been released, then the larger producer has less profit incentive to actually make these drugs in the first place. 

Slutter McGee

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## The Gold Standard

> No, there wouldn't be as much money. Development of drugs can cost billions even without government interference. But these drugs generally have a low marginal cost to actually produce afterwards. If a generic drug producer can simply transfer most of the fixed costs to the larger producer and still enter the market almost immediately after the drug has been released, then the larger producer has less profit incentive to actually make these drugs in the first place. 
> 
> Slutter McGee


Nothing short of space travel would cost billions to develop without government interference. But if we aren't talking about a free market then forget everything I said. You might as well keep patents because you're right there wouldn't be as much money without them, and if you got rid of them drug companies would lobby for some other kind of protection, so it's really irrelevant. 

This system of government protecting their riches certainly incentivizes them to put drugs out there. Not good ones, but something. If that is the incentive you want, your betters have already set that up for you. The free market doesn't guarantee anyone wealth. It guarantees that those that best serve the customer and best run their operation will be successful. But we aren't talking about that, and I find no point in debating what kind of government intervention is functionally better than the ones we have now, because I already know what ideal solution is, whether realistic or not. Hence the Soviet bread line analogy. They could debate reality until they were blue in the face, but it doesn't matter. Only people free to own property and transact with other free people can ideally distribute bread.

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## helmuth_hubener

> Google aint that hard.
> 
> http://www.justice.gov/atr/public/pr.../1999/2450.htm
> 
> Slutter McGee


Once again, I do not think there is any evidence whatsoever that this cartel ever existed.  I am open to reading and considering such evidence.  But I have yet to read any.

To explain once again: that various government either found them "guilty" of something or agreed to be paid lots of money by them without making any ruling means less than nothing to me.

I don't know how I could be more clear.

Until someone can demonstrate actual, real documentation of the actual real live existence of an actual functioning cartel that went on for more than two years, I am very, very skeptical that such a thing has ever existed.

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## Slutter McGee

> Once again, I do not think there is any evidence whatsoever that this cartel ever existed.  I am open to reading and considering such evidence.  But I have yet to read any.
> 
> To explain once again: that various government either found them "guilty" of something or agreed to be paid lots of money by them without making any ruling means less than nothing to me.
> 
> I don't know how I could be more clear.
> 
> Until someone can demonstrate actual, real documentation of the actual real live existence of an actual functioning cartel that went on for more than two years, I am very, very skeptical that such a thing has ever existed.


There is tons of evidence, but instead of searching for you, let me give you another example. The famous lycine cartel that went for 5 years or so before falling apart. They actually have recordings taken from a person wearing a wire.

Caught on this wire along with plenty of actual evidence was the following famous quote:

Our philosophy is just the opposite. In reality, it is our competitors who are our friends and the customer is our enemy - Michael Andreas

I really don't know what else to tell you. I understand arguments that cartels can't last long, or that they aren't that harmful, but to deny they exist at all seems pretty silly. Either way, I am done doing your research for you. 

Slutter McGee

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## helmuth_hubener

You are very easily convinced of the existence of these things, because you don't know the economics that tells us they are virtually impossible.  Kind of like people like Travlyr who are easily convinced that the moon landing was fake, just show them a video and they believe it, because they do not understand the facts and background involved.  Or other people who are easily convinced of Free Energy devices or Alien landings.  They don't understand the science behind it, and if they did, then all the crop circles and pyramids and what-not -- no matter how seemingly-plausible -- would not be strong enough evidence to convince them.  So it's an impasse.  We have to just leave this aside and move on.

I don't know, Slutter.  Bottom line: I have never had any problems buying lycine.  Of course, I've never bought lycine (I don't think), but I don't think that anyone who has has ever had any problems either.

I have bought vitamins, and I have never had any problems buying vitamins.  I have never felt like the price I paid was a rip-off.  I always see an entire aisle with many, many different brands of vitamins available, and multiple choices even for minor specialty vitamins, like Vitamin A or nursing mother vitamins.  Looks like a highly fragmented market with tons of competition from my point of view, looking down that aisle.  Now let's say for the sake of argument that all these people are in cahoots with each other!  Eek! What an outr.... wait.  Why should I care, again?

----------


## osan

> I did a few searches before starting this thread, and while there seem to be a few threads in the past it has been several years, so I thought I would start a new general discussion on this topic.
> 
> I think we have come a long way in antitrust regulation since its inception. An understanding that large marketshare is not necessarily a bad thing, especially when it is a result of innovation is far more prevalent. Some logical price fixing schemes have even been allowed with an efficiency argument. Robinson Patman still needs to be repealed, but it is largely ignored by the DOJ.
> 
> While there have certainly been a lot of bad Supreme Court decisions and laws passed, it seems that enforcement of these regulations is getting more reasonable. At the same time other regulation has created more barriers to entry and retrained competition. So I just wanted to get yalls opinion on Price Fixing, Monopoly, Oligopoly, Mergers, Cartels, and anything to with this subject.
> 
> It seems to be a subject that a lot of libertarians are split on.
> 
> Slutter McGee
> ...


This is answered fairly simply.

If a party harms you, tort law should hold the remedies.  Doesn't matter whether you are damaged by faulty products, accidents, or the artificial erection of barriers for entry into markets.  If you can make your case, the laws should be there to do the right things.  If the conspiracy crosses the line into the criminal, we have law for that as well.

----------


## helmuth_hubener

> This is answered fairly simply.
> 
> If a party harms you, tort law should hold the remedies.  Doesn't matter whether you are damaged by faulty products, accidents, or the artificial erection of barriers for entry into markets.  If you can make your case, the laws should be there to do the right things.  If the conspiracy crosses the line into the criminal, we have law for that as well.


Wrong.

Simple and wrong.

----------


## The Gold Standard

> Wrong.
> 
> Simple and wrong.


If there is a truly free society and free market in law, it is possible the market would determine that price fixing and artificial barriers to entry are illegal and restitution would be owed. I don't know if that would be the case, but it could be. I would find that discussion more interesting than the current system where they claim it is illegal, but it is fine for companies to do it that get the thumbs up from the government or for the government itself.

----------


## helmuth_hubener

If there is a truly free society and free market in law, it is possible the market would determine that it's illegal to smoke marijuana, or to manufacture small, round magnets.  Sure, it could.

_Kind of._

You could only ban drugs and magnets and (lame, futile) attempts at price fixing within the framework of an opt-in, totally voluntary community.  Then you can ban yourself from doing whatever you want.  Go crazy.  But you can only ban yourself, see?  You can't ban other people who _don't_ opt in, who _don't_ agree to it, and even if they have opted in, you can't stop them from later opting _out_.

In the larger framework of society at large, and cross-community interaction, no, you can't ban such things.  What would the libertarian justification be?  Is there any aggression?  Answer: no.  Under libertarianism, when the answer's no, the story is done.  The buck stops.  The matter is closed.  No _aggression_, no foul.  That's osan's mistake: it's not about harm, but aggression.  All kinds of junk can "harm" me, but I'm only justified in using force in retaliation to aggressive force.

----------


## The Gold Standard

> If there is a truly free society and free market in law, it is possible the market would determine that it's illegal to smoke marijuana, or to manufacture small, round magnets.  Sure, it could.
> 
> _Kind of._
> 
> You could only ban drugs and magnets and (lame, futile) attempts at price fixing within the framework of an opt-in, totally voluntary community.  Then you can ban yourself from doing whatever you want.  Go crazy.  But you can only ban yourself, see?  You can't ban other people who _don't_ opt in, who _don't_ agree to it, and even if they have opted in, you can't stop them from later opting _out_.
> 
> In the larger framework of society at large, and cross-community interaction, no, you can't ban such things.  What would the libertarian justification be?  Is there any aggression?  Answer: no.  Under libertarianism, when the answer's no, the story is done.  The buck stops.  The matter is closed.  No _aggression_, no foul.  That's osan's mistake: it's not about harm, but aggression.  All kinds of junk can "harm" me, but I'm only justified in using force in retaliation to aggressive force.


I agree with you. I don't think that kind of collusion would last long in a free market if it comes up at all, and I don't think aggressive force is the solution if it does. But that doesn't mean that's how a free market in law would necessarily work, though I can't imagine any other way it would.

----------


## helmuth_hubener

> But that doesn't mean that's how a free market in law would necessarily work, though I can't imagine any other way it would.


 You make a good point in that having a free market in law does not necessarily mean that _libertarian_ law will be enacted.  Many or even most people may choose to subscribe to systems of law with various non-libertarian elements.  And that's their choice, right?

Right.  It's their choice.  Thus, actually, I would assert that the seemingly non-libertarian law that they prefer and are choosing to subject themselves to is only _seemingly_ non-libertarian.  Actually, it's perfectly libertarian.  Just as it's perfectly libertarian to join a tuba orchestra and be told when to breathe!  To breathe, for heaven's sake!  That's tyranny extreme.  But it's voluntary and you can leave whenever, so actually, it's not tyranny at all.

And so, according to my own understanding of libertarian theory, which I will admit is very limited and imperfect, I would say that actually if you have a free market in law as we libertarians understand the meaning of the term "free market," then you do, necessarily, have libertarian law.  You are living under libertarian law on the meta-level.  It's the only law that is universal and society-wide and that you cannot opt out of.  It's the OS of the legal system, and everything else is apps built on top of that.

----------


## Lucille

http://market-ticker.org/akcs-www?post=229868




> The only solution to the health care mess is to enforce the damned law as regards monopolist and related practices that have the effect of restraining trade in health care goods and services.
> 
> If you do that then this sector of the economy collapses in cost by 80-90% -- in other words, back to ~3-4% of the economy from 20%.
> 
> The impact of such an act requires removal of special exemptions from the law along with enforcement of existing laws, specifically Sherman, Clayton and Robinson-Patman (ensconced in 15 USC.)  All of these laws carry both civil and felony criminal penalties for violations, and enforcement of them in this sector of the economy would instantly collapse the cost of health care to the point that the average American could pay cash for necessary care in virtually every case.
> 
> For the remaining, catastrophic cases you could buy insurance (if you wished) for an utterly tiny amount of money, much as you buy term life insurance - - at a cost of literal pennies a day.
> 
> _Nobody from either political party will promote and insist on this because one dollar in five in the economy is a hell of a lot of cash and everyone involved is getting rich bleeding you dry -- never mind rendering all sorts of terrible advice to you that has, over the last 30 or so years, literally shoved millions of Americans in the hole_.

----------


## helmuth_hubener

> If you do that then this sector of the economy collapses in cost by 80-90%


So, your assertion is that the aggregate profit margin of the health care industry is 80-90%.  Is that right?

And the solution is, of course, as always, that *The Government Do Something!(TM)* such that the profit margin becomes zero.  Or maybe they'll be generous and allow 1% or 5% or something.

Is it even necessary for me to point out that this entire plan makes no sense and furthermore is based on total fantasy/lies?

----------


## Lucille

HH, as you may or may not be aware, Lucille didn't say any of that.  Denninger did.  I mentioned his interest in applying antitrust laws to the MedIC once before in this thread, and he reiterated it today in light of the SCOTUS case and the Republican "solution."  That's all.

----------


## The Gold Standard

Applying antitrust laws to the medical industrial complex would defeat the purpose of every health care legislation they have ever passed, which is to create giant corporations beholden to the government and drive up the price of health care to get Boobus crying for help.

----------


## osan

> Wrong.
> 
> Simple and wrong.


I should ignore this, but it's such an ineptly contrived response that you need to be called out.  Your response is... nothing.  You assert and make no argument.

FAIL. 

You appear fond of such behavior, which can only leave one wondering why.

----------


## helmuth_hubener

> I should ignore this, but it's such an ineptly contrived response that you need to be called out.  Your response is... nothing.  You assert and make no argument.
> 
> FAIL. 
> 
> You appear fond of such behavior, which can only leave one wondering why.


 Thank you very much for the heart-felt criticism, osan!  I will rise to your occasion and issue an actual response, how about that?  You wrote:

"If a party harms you, tort law should hold the remedies. Doesn't matter whether you are damaged by faulty products, accidents, or the artificial erection of barriers for entry into markets."

I respond:

Osan, it just so happens that it actually matters a great deal precisely what it is you are "harmed" by.  I may be "harmed" by people buying from other people and refusing to buy from me.  But I may not use force to combat that harm.  A more productive way of dealing with it would be to be, well,... productive!  Make the customers an offer so good they can't help themselves but to but from you.

So, as long as we're agreed on that (and I think all reasonable freedom-lovers would) let's proceed.  Just what is this "artificial erection of barriers for entry into markets" you speak of?  

Is it that all the existing businesses are refusing to to business with you?  That's their right.  Freedom of association.  You may not use force to combat that.  

Is it that all the existing businesses are charging way too little for their product, temporarily taking a loss in an effort to drive you out of business before you really even get started (another boogie-man that never actually happens, BTW)?  That's their right.  Freedom of association.  You may not use force to combat that.

Is it that the existing businesses are somehow, in any way whatsoever, trying their best to prevent you from entering their industry and competing with them?  As long as they do not initiate force, they may do that until the cows come home, all they want, in every which way they like, and you can't do a thing about it but cry.  You know why?  Because that's their right.  Freedom of association.  You may not use force to combat that.

----------


## helmuth_hubener

> HH, as you may or may not be aware, Lucille didn't say any of that.  Denninger did.  I mentioned his interest in applying antitrust laws to the MedIC once before in this thread, and he reiterated it today in light of the SCOTUS case and the Republican "solution."  That's all.


So, Lucille, you are now saying that you disagree with Denninger's nonsensical statement(s), is that correct?

----------


## Mr Tansill

It depends...

In the case of something that is "needed" (admittedly qualified), then yes, there should be regulation of those companies that provide that something. For instance, electricity. Companies that provide electrical power use power lines that traverse public property and there are limits on how much of that cable can be installed (i.e. there is an actual, real barrier to market entry for other companies that decide they would like to jump into that market). So in cases like these, yes, companies should be regulated appropriately.

In the case of something that is "unnecessary," no, there should be no regulation of that market or those products. I like to use Microsoft as an example, as they were a very famous anti-trust case. The following is a cut and paste summary from the Wikipedia article covering the case from 2001:




> "The plaintiffs alleged that Microsoft abused monopoly power on Intel-based personal computers in its handling of operating system and web browser sales. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system. Bundling them together is alleged to have been responsible for Microsoft's victory in the browser wars as every Windows user had a copy of Internet Explorer. It was further alleged that this restricted the market for competing web browsers (such as Netscape Navigator or Opera) that were slow to download over a modem or had to be purchased at a store. Underlying these disputes were questions over whether Microsoft altered or manipulated its application programming interfaces (APIs) to favor Internet Explorer over third party web browsers, Microsoft's conduct in forming restrictive licensing agreements with original equipment manufacturers (OEMs), and Microsoft's intent in its course of conduct."


The problem in this case, is that Microsoft should be allowed to market their entire product line as they see fit - I don't see any way a legitimate argument could be made to break up a company that invented something from the ground up, which never before existed. Such a product is purely a luxury, and there is no justification for forcing them to dissolve. No barriers to entry stop anybody from getting out there and competing in that marketplace.

----------


## The Gold Standard

> It depends...
> 
> In the case of something that is "needed" (admittedly qualified), then yes, there should be regulation of those companies that provide that something. For instance, electricity. Companies that provide electrical power use power lines that traverse public property and there are limits on how much of that cable can be installed (i.e. there is an actual, real barrier to market entry for other companies that decide they would like to jump into that market). So in cases like these, yes, companies should be regulated appropriately.


Sure there is a limit to how much cable can be run, but it is a lot higher than they use now. Of course, were there a free market competing companies would probably develop newer delivery methods than the 100 year old poles and lines the monopolies are comfortable using. This is a terrible excuse for regulating utilities.

----------


## osan

D00d, you really need to learn a few things before opening your pie-hole because you are showing some sore ignorance here.  It is very late and I will not go into this, save superficially.




> Thank you very much for the heart-felt criticism, osan!  I will rise to your occasion and issue an actual response, how about that?  You wrote:
> 
> "If a party harms you, tort law _should_ hold the remedies. Doesn't matter whether you are damaged by faulty products, accidents, or the artificial erection of barriers for entry into markets."
> 
> I respond:
> 
> Osan, it just so happens that *it actually matters a great deal precisely what it is you are "harmed" by.*


Thus far, we agree.




> I may be "harmed" by people buying from other people and refusing to buy from me.


You have to be joking.  If this is a serious posit, then you really need that paper bag for all public excursions because you appear to have set some sort of new local record for FAIL.  This is a loose analog of the broken-window fallacy.  This is so wildly failed, I am not even sure how I would address it.  $#@! like this just make my head spin.




> But I may not use force to combat that harm.  A more productive way of dealing with it would be to be, well,... productive!  Make the customers an offer so good they can't help themselves but to but from you.


This has nothing to do with anything I wrote.




> So, as long as we're agreed on that (and I think all reasonable freedom-lovers would) let's proceed.


Cannot agree with that which makes no shred of discernible sense.   I mention that we have tort law in place with the ostensible purpose of resolving tort issues and you go off on some bizarre non sequitur about market competition.




> Just what is this "artificial erection of barriers for entry into markets" you speak of?


There are innumerable examples of this.  Microsoft is a great example of a long-standing policy of making it nearly impossible to successfully market software they deem to be competing with their own.  This has softened in the last decade or so, but go back 25 years and it was running wildly.

Industries and even individual corporate entities lobby Congress for the passage, repeal, or modification of statutes that make new entry into the respective industries more difficult or even practically impossible, thereby reducing or even eliminating competition, practically speaking.




> Is it that all the existing businesses are refusing to to business with you?  That's their right.  Freedom of association.  You may not use force to combat that.


Seems to me you have little to no experience in the business world.  I, OTOH, have over 30 years in it, including running a consulting firm of my own.  If you have any such experience, you should well know what a "barrier to entry" is, what the types are, how they come to exist, and so on.  Judging by what you wrote here, I am tempted to surmise that you have no business experience at all.




> Is it that all the existing businesses are charging way too little for their product, temporarily taking a loss in an effort to drive you out of business before you really even get started (another boogie-man that never actually happens, BTW)?  That's their right.  Freedom of association.  You may not use force to combat that.


WTF?  Once again, this has not the least thread of anything to do with what I wrote.  You need to lay off the banana peels.




> Is it that the existing businesses are somehow, in any way whatsoever, trying their best to prevent you from entering their industry and competing with them?  As long as they do not initiate force, they may do that until the cows come home, all they want, in every which way they like, and you can't do a thing about it but cry.  You know why?  Because that's their right.  Freedom of association.  You may not use force to combat that.


More ignorance of which the shame should be stinging you woefully.  If you feel that an entire industry is entitled to collude to exclude competition, then you really do not get free markets at all.  Collusion to exclude competition is in fact an act of aggression aimed at denying you the opportunity to compete.  If for example, I work to deny you any ability to go into business for yourself, I have in fact caused you the harm of denying your organic right to enter into business on the so-called "level playing field", which in this case should mean nothing more or less than that the competitive environment poses the same hazards and opportunities for all who choose to go there and that the only thing that chooses the winners and losers is who makes the overall best product.  If car manufacturers started in an easy environment that exposed them to the "natural" hazards of healthy competition but then, after having established themselves, succeed in getting laws passed that place requirements on such manufacture such that virtually nobody else can afford to meet the statutory requirements, then an artificial barrier to entry into the market has been erected - this particularly when the real reason behind enactment is not, for example, the safety of those driving the vehicles, but more for the purposes of freezing out new competitors.

This is what anti-trust law is partly supposed to address and it is unnecessary because tort law can do the same thing.  Note I wrote that tort law SHOULD protect people from the brands of harms that SOME antitrust activities can cause.  Nowhere did I say that tort law accomplishes this or that all such antitrust actions cause the sorts of harms to which tort law applies - or even that all such activities constitute harms.  You seem to have read this into my words.  Your bad.

Really - before opening your mouth on a subject, you should at least hold some modicum of knowledge on it, but do feel free to proceed as you wish.

----------


## helmuth_hubener

> but do feel free to proceed as you wish.


That's the root, nay, the entirety of our disagreement from beginning to end, top to bottom.  I believe in letting people be free to proceed as they wish.

You do not.

You believe in setting up a monopoly to... protect you from monopolies.

Brilliant, osan.

----------


## helmuth_hubener

> It depends...
> 
> In the case of something that is "needed" (admittedly qualified), then yes, there should be regulation of those companies that provide that something. For instance, electricity. Companies that provide electrical power use power lines that traverse public property and there are limits on how much of that cable can be installed (i.e. there is an actual, real barrier to market entry for other companies that decide they would like to jump into that market). So in cases like these, yes, companies should be regulated appropriately.


The reason the electrical industry is how it is, is because the government mandates that it be that way.  Then people, like you, look at how it is and say "Look, you ignorant free-marketeers, we need the government to micromanage this industry because that's the only way the system, as it is, could possibly function!"  And yeah, that's true to an extent; key words being: *as it is!*

Do you see how this is totally circular reasoning?  Government made this a monopoly system, so we need government to make this a monopoly system.  How does that make any sense?

It was entrepreneurs that created the electrical distribution systems.  Then governments took over and made them into crony monopolies and we got 100 years of stagnation.  How is that desirable?  It's not.  It's lame.  It's junk.  Let's give the industry back to the entrepreneurs and let's see some disruption!

----------


## Slutter McGee

> You are very easily convinced of the existence of these things, because you don't know the economics that tells us they are virtually impossible.


A simple game theory model will show you that its possible for a cartel to hold under certain circumstances. Just play a Cournot game with a grim trigger strategy. Give monopoly profits divided by 4 as cartel profits and discount it into the future, then find the incentive to cheat by looking the full monopoly profits minus episilon for one period and assume they are punished by prices to nash equillibrium level for all future periods. Then set up an inequality and find what your discount factor is must be for the cartel to hold.




> I don't know, Slutter.  Bottom line: I have never had any problems buying lycine.  Of course, I've never bought lycine (I don't think), but I don't think that anyone who has has ever had any problems either.


You probably haven't bought lycine because I obviously misspelled it. It is lysine, and that I would virtually guarantee you have bought it. Ever bought a softdrink? Lysine is an additive. and used in tons of product. But it is an intermediate good. You thought nothing of paying an extra ten cents for your coke, but neither did the millions of other people. It caused a lot of issues, but its damage was spread out into tons of smaller costs, which is one reason it lasted. Cartels don't actually jack up to monopoly prices. They would get caught that way.




> I have bought vitamins, and I have never had any problems buying vitamins.  I have never felt like the price I paid was a rip-off.


The prices of vitamins more than doubled under the cartel that lasted through the 90's. That being said, do you like steak or chicken. The market for vitamins is a lot bigger than going to wall greens and buying a few vitamins. That cartel drove up the prices of all kinds of other goods, and a large part of that was hidden because vitamins are also an intermediate good.

I seriously don't know what else to say to you. I seriously don't know how you can say that cartels can't exist when we have 140 years of evidence that they can. They may not be able to last forever, but they can stay stable long enough to do some serious damage to the consumer.

Slutter McGee

----------


## Mr Tansill

> The reason the electrical industry is how it is, is because the government mandates that it be that way.  Then people, like you, look at how it is and say "Look, you ignorant free-marketeers, we need the government to micromanage this industry because that's the only way the system, as it is, could possibly function!"  And yeah, that's true to an extent; key words being: *as it is!*
> 
> Do you see how this is totally circular reasoning?  Government made this a monopoly system, so we need government to make this a monopoly system.  How does that make any sense?
> 
> It was entrepreneurs that created the electrical distribution systems.  Then governments took over and made them into crony monopolies and we got 100 years of stagnation.  How is that desirable?  It's not.  It's lame.  It's junk.  Let's give the industry back to the entrepreneurs and let's see some disruption!


So I know this doesn't happen much on the internet, but I agree with some of your theme here. Yes, government mandates that electricity be a certain way. Yes, the reasoning you outline above is circular. That said, can you describe a system in which there is free and unlimited competition in the electricity market?

If I was a company that wanted to run electric cable through a city, I have the right to do so - same as any other company because we're all equal, right? Now, multiply that by N, or any other large integer - you see where this is going? A market like this quickly gets crowded with multiple competing electrical distribution lines that run rampant all over town - hardly a desirable outcome for a city to have, but one they really can't prevent right? I mean, not without regulating the market to some degree...the same is the case in the internet. We all share the same basic infrastructure. No one company gets to be the gate-keeper to certain series of 0s and 1s over any other.

I get your theme, I really do. I am looking at the system *as it is* and not as it *should be*. Right? In an idealistic sense, I agree with you absolutely. The internet should be free, open, unhindered, and left alone to the maximum extent. In actuality, however, under our current system (*as things are*), we have powerful corporations and other entities which engage in lobbying and the drafting and creation of laws and practices which act to undermine their competition (which - news flash - having cheaper prices isn't the only way to accomplish that novel task...). Owning the market is a wonderful way to exert control, and it is the desire of every company no matter what the product might be, so in a sense, I really don't blame them - survival of the fittest and all...

"Gee Bob, we seem to be losing a lot of TV subscribers to Netflix"..."Hmmm, maybe if we restrict the speed at which the data is delivered, it will become a less desirable experience, and consumers will flow back to watching television." "Good idea...draft it, and have it on my desk by the morning..."

Look at Apple as an example. They have a wonderful App store don't they? Do you think they're going to allow you or any other entity to sell apps in their market without taking a cut? Do you think they'll allow apps that don't toe their corporate line? No way, not in this universe. And why should they? It is *their* market - they built it, they own it, and they can do what they want with it. In the case of the infrastructure of the internet, however, it doesn't belong to Comcast, NBC, Verizon, or AT&T - it belongs to the US taxpayer for this simple reason: _it cannot exist without the use of eminent domain_, and therefore, it must meet the requirements set forth by the use of that legal framework - namely, it can only be done for public benefit, and expressly not the advantage of a private corporation.

----------


## Lucille

> So, Lucille, you are now saying that you disagree with Denninger's nonsensical statement(s), is that correct?


You mean his numbers?  I don't recall agreeing with them in the first place.  He went into detail about it in his book, but I haven't read it.  I assume even if antitrust laws were applied to the MedIC, prices would fall but then, government being what it is and doing what it does, would $#@! it up again.  

I think Denninger is going to war with the army he has, so to speak.

For the record, I'm not a proponent.  As with everything, I would prefer government get out of it completely.  I also think Ron had far better solutions.

You seem annoyed.  Sorry if I derailed the thread focusing on the medical industry.  I just thought it was important to point out that antitrust laws are not applied where they might help actual people rather than industries.  



Chapter XVI (Page 172):  https://mises.org/sites/default/file...0Machine_2.pdf

(BIRM)

----------


## helmuth_hubener

> For the record, I'm not a proponent.  As with everything, I would prefer government get out of it completely.  I also think Ron had far better solutions.


 Agreed!




> You seem annoyed.


Not at all.  I just didn't realize that you were posting, without comment, a statement that you disagreed with.

I'm glad we can both join in disagreement with Mr. Denninger.

----------


## Vanguard101

> No.
> 
> Government makes it far more likely that a monopoly will exist, but it isn't the one and only way it can happen.


This is 100 percent false

----------


## kcchiefs6465

> This is 100 percent false


That makes no sense.

If the government does not make it far more likely that a monopoly will exist, then it cannot be the one and only way it can happen.

----------


## NorthCarolinaLiberty

> I always see an entire aisle with many, many different brands of vitamins available, and multiple choices even for minor specialty vitamins, like Vitamin A or nursing mother vitamins.





> The prices of vitamins more than doubled under the cartel that lasted through the 90's. That being said, do you like steak or chicken. The market for vitamins is a lot bigger than going to wall greens and buying a few vitamins. That cartel drove up the prices of all kinds of other goods, and a large part of that was hidden because vitamins are also an intermediate good.



Yes, those vitamins were used in a lot of other goods, but consider the type of goods.  The companies involved were all pharmaceutical companies.  One probably controlled about half the market, but they hardly had the market cornered as a group.

Pharmaceutical company vitamins are, in my consumer opinion, often of lower quality.*  Those are also likely lower grade items containing those vitamins.

There were (and are) still a lot of other choices for vitamins and other products.  Top quality vitamins.  If these cartel vitamins and products were rising at some astronomical rate, then the consumer had the option of buying something else.  Did the consumer have an interest in doing this?  Consumers don't often have the inclination.  It is just laziness, which usually results in more government.

The so-called _vitamin cartel_ issue easily had a market solution.  If only people had paid attention.

I know next to nothing about anti-trust, but I might guess that other products/industries might be similar to this.  Could be wrong, but I'd like to see examples.



* German based pharmaceutical Schwabe is an exception to this.  They have subsidiaries that do make some high quality products.

----------


## osan

> That's the root, nay, the entirety of our disagreement from beginning to end, top to bottom.  I believe in letting people be free to proceed as they wish.
> 
> You do not.


More nonsense.  Once again you assert with no clear reasoning for support.




> You believe in setting up a monopoly to... protect you from monopolies.


Of course, because you said so.  Please.

A free market does not mean a free-for-all, unless chaos and tyranny are your desires.  Just as "anarchy" does not mean "no rules", "free market" similarly means the same.

If left to their own devices, some people run amok and most of the rest tend to be content to let them.  This is demonstrated to us every minute of every day.  Our history is literally clogged with examples of this.  Regarding that, we all have a choice.  Either we adopt some very basic rules for individual/group comportment or we let the fur fly any which way it might.

If we have rules, then we must have a mechanism for enforcement or there is no point in having them.  That is not "aggression" just as an act of self defense against a mugger is not.  Properly administered, it is a purely reactive mechanism which responds to the violations by one against the rights of another.  That people have corrupted this idea on a worldwide basis speaks not to the notion itself, but rather to human habit.

In any event, this is all off the original point.  I asserted that antitrust law was, at best, superfluous because we have tort law that can do precisely the same things.  You then went off on some weird tangent about competitive markets, on which I called you out, and to that you responded with more nonsense.

This exchange, having run most pointlessly as it has, is now done as far as I am concerned.  Hold any opinion you wish.  I do not care a whit.

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## helmuth_hubener

Hey, no worries, osan!  I don't know why you've decided you hate me, but it's not mutual!

"Free market" really _does_ mean free for all!  The most important freedom, as far as Helmuth is concerned, it the freedom to do things that Helmuth doesn't like.  The most important freedom, as far as osan is concerned, is the freedom to do things osan doesn't like.  Everyone is all for the freedom to do things they like!  It's  whether they will stand up for the freedom to do things they hate that's the true litmus test of whether they are a true freedom-lover or not.

One cannot apply tort law to actions which are not justly considered torts.  Erecting "artificial barriers to entry" seems to me to be one such action.  Not a tort.  Not legally actionable.  I asked you to define more precisely what you meant by "artificial erection of barriers for entry into markets," since it's conceivable you were thinking of some actions which actually _would_ be torts, which I simply had failed to imagine.  This was your response:

"Microsoft is a great example of a long-standing policy of making it nearly impossible to successfully market software they deem to be competing with their own."

Now this still does not define a specific action.  _Clarity_, osan!  Clarity should be our watchword!  I have befuddled you by "going off on tangents" from your perspective, and I apologize.  And this is where you have befuddled me.  I have no way of knowing what action(s) of Microsoft you are referring to.  There's a lot of history there, and what's more, a lot of competing versions of history.  *Could you give just a single, clear, defined, described action which I can understand which, to you, would constitute an "artificial erection of a barrier for entry into a market" which you think should be actionable as a tort?*

Then we can talk about that.

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## Slutter McGee

> "Free market" really _does_ mean free for all!  The most important freedom, as far as Helmuth is concerned, it the freedom to do things that Helmuth doesn't like.  The most important freedom, as far as osan is concerned, is the freedom to do things osan doesn't like.  Everyone is all for the freedom to do things they like!  It's  whether they will stand up for the freedom to do things they hate that's the true litmus test of whether they are a true freedom-lover or not.


This statement in no way has any $#@!ing thing to do with antitrust law. 

Slutter McGee

EDIT: I just think I am pissed because I have responded specifically to everything you have said. Specific examples. Evidence. Theory. Etc. but as soon as I challenge or answer you, instead of looking it up, studying and challenging back, you just ignore everything said and repeat the same goddamn thing over again.

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## Bryan

Without reading everything here...

Certainly it can be problematic for one company to gain a monopoly on something but that's also not a guarantee it will "do bad things".  In a truly free society there would not be antitrust laws, but that does not mean that its people have to be OK with all companies. The free market does allow for boycotts against a company if they are seen to be engaged in business practices they do not agree with. This is superior to a government solution since the market decides. Education is key, but in many cases there can be added safeguards put in place by other companies. For example, retails can set and publish their own boycott criteria and refuse to carry some companies products, consumers who like the boycott criteria would appreciate that service and shop there knowing they don't have to worry they are supporting something that is harmful.

When the government sets antitrust law the exact terms and application of the law can and will get twisted to favor the politically connected.

That said, this solution won't work well for us now since our system favors corporations and drives their growth at the expense of being self-supporting. The cancer needs to be completed rooted out, starting with the IRS.

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## osan

> Hey, no worries, osan!  I don't know why you've decided you hate me, but it's not mutual!


Stop putting words in my mouth.  

Your approach to responding to me is strident and obnoxious.  Adopt a more adult tone and we will be able to have exchanges of a more civil nature.  Act like an ass and I will let you know about it.  I don't give people $#@! unless they behave in a manner deserving of it.  Take from that what you will.[/QUOTE]

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## osan

> Without reading everything here...
> 
> Certainly it can be problematic for one company to gain a monopoly on something but that's also not a guarantee it will "do bad things".


Depends on the definition of "bad". In microeconomics it is a well know fact that monopolies will always produce less of a given product than the market demands. It is something of a counterintuitive reasoning behind it and I do not recall the details at this moment, but it is nevertheless a fact. When determining the volume of production, businesses use certain calculations. For monopolies the results are of necessity different from those of other sectors where competition exists. This is good for the monpoly in question, but is presumably bad for the market and does, in point of fact, render that particular market unfree in some manner and degree.

*ETA:*

I cobbled up the following chart to illustrate the monopolists interest v. that of the market under the conditions of imperfect competition that monopolies carry as part of their fundamental microeconomic nature.

 [sorry, for some reason neither the jpg or png file will show, despite sourcing from Flickr.  Any ideas??]

https://www.flickr.com/photos/82012878@N00/16064010103/

Direct your attention to the values of x(sub m), x*, p(sub m), and p*.  x* and p* are the optimal production and cost points where the marginal cost and marginal price equal each other.  These are the values that a rationally self-interested firm will use in producing and pricing their goods.  x(sub m) and p(sub m) are the rationally optimal equivalents for a monopoly.  These points differ from those under perfect competition for a variety of reasons including accounting for inframarginal customers, for whom the provision of service is not in the rational self-interest of the monopolist.  

From the materials for a mid-level microeconomics course out of Yale:




> Consumers in a monopoly lose the areas A and B compared to perfect competition. The monopolist loses area C and wins area A. Hence, there are distributional implications (consumers lose and the producer gains) as well as efficiency implications (overall welfare decreases).




That is what I mean when I say that rational monopolies do "bad" things _of necessity_.  It is in their rational self-interest to do them.  If we regulate that behavior away, which we typically do either by prohibiting them from acting in accord with their economic best interests or, far more commonly by regulating pricing upward to the detriment of the consumer and to the benefit of the monopolist, we have retained the element of coercion, which so many appear to rail against.  There is _of necessity_ no free market where monopolies are concerned and this absence is a matter of economic science on the one hand, or political interference on the other.  Either way, somebody is taking it in the neck and this is why monopolies are bad for economies and human freedom in general.  It's all there in the numbers, which in this case really are not lying.

In and of itself, coercion is not evil.  The evil arises in the nature of specific instances of coercion.  In the vast majority of cases that I have seen, the coercions in question are in fact evil as all hell.  But will we call the coercion to not commit murder, fraud, and other very serious crimes evil?  I would think not.  My gun, as it sits idly on my hip for the world to observe is in a sense my message of the implicit threat of my personal form of coercion to others that warns of the dire consequences of violating my basic rights.  Coercion, applied in the right ways and for the right reasons is a blessing that keeps at bay those who would do harm.  Coercion is never correctly suited to the peaceable man who commits no trespass against his fellows.  It is there that men go so very badly awry that, for whatever reason, they fail to properly identify the targets of just coercion and force, which is strictly for criminals and in some instances those who have breached their contractual promises.  To govern the properly self-governing man is a penultimate evil committed by one against another and should be responded to with utmost harshness, up to and including taking the life of the violator when augury stands unheeded and injury has been sustained or looms imminent.  Many will chafe at this idea, claiming that this would lead to a "wild west" environment.  Nothing could be further from truth.  Moving from our current position to that would, of course, result in some terrible things happening, but after the period of adjustment, the new equilibrium would IMO prove vastly superior to the old.

We use coercion and other force against people who like to light up a joint or stick needles in their arms.  We used to do the same (still do on rare occasions) to *****s and those who marry outside of their own "race" (what a sadly stupid notion on its face... like "race traitor", which is fodder for idiots).  The ways in which we unjustly coerce vastly outnumbers the just and it is this hopelessly flawed approach to human relations that has landed humanity in a world of hurt and shall yet plunge us into a new Dark Age, only this time it will be highly tech-enabled.  By that virtue will Theye retain their death grips upon the throats of the rest.




> In a truly free society there would not be antitrust laws,


Once again, this predicates largely on the precise definition of "truly free" and what, exactly, defines "anti-trust". That last bit is not mere pedantic foolery, either.  Ask any law professor what defines anti-trust law and a likely response will be "nobody really knows".  The anti-trust laws are devised in so befouled a manner as to specify virtually nothing with clarity, which in itself should tell you much about the nature of the American version.  The soviets openly posited that theirs was a truly free society. The absurdly blatant childishness of this claim could not have been missed by Helen Keller three days after her death, and yet it was their self-styled definition of soviet society.  So on top of all the other problems that we all face at the hands of the tyrants calling themselves "government", we add to it the blatant and purposeful misuse of language against which the vast and overwhelming majority of humanity is unable to fight due mainly to having been trained to a greatly degraded standard of linguistic, and thereby thought, skill.

Im' not trying to be a PITA here, though perhaps I succeed in any event; I am pointing out that words are tricky, important, and that depending on their precise, or not so precise usage, there could be anti-trust laws in even a free land.

Let us briefly rewind to the basics. To be properly free, at least by my definition, men stand centrally within the circle of their rightful prerogatives to act as they please with the one exception that they bring no harm to others, including thwarting their exercise of even rights. That leaves the avenue of possibilities broadly expansive and the restrictions vanishingly narrow. By living in accord with this, the realized potential for freedom and prosperity are optimized to their greatest degree for everyone because opportunity is not being actively diminished by one man against his fellows.

But as we all know, people are not perfect and are not always angels. Even in the best circumstances one man's understanding of what is permissible may stand in stark contrast to that of another's. When those differing understandings clash, how is the dispute to be resolved?  And when one man's ethics fall prey to his temptations such that he knowingly violates his brother pursuant to sating his desire to have that to which he is not rightfully entitled, we have yet another flavor of conflicting interests.

When such conflicts arise, how shall they be resolved in a "truly free" society? If rules, however few and well designed they may be, are to have any meaning, then they must be backed with the promise of force against those who refuse or otherwise fail to toe their line. Without it, where is the incentive for "bad" people to behave themselves in accord with those rules? Indeed, without the specter of force behind them, rules become naught but mere suggestions to be respected or ignored as one pleases at any given moment.

If we are not to run amok in chaos with the strong consuming the weak or what have you, which for practical reasons tends to be a very undesirable outcome, then we must have a tiny handful of rules by which we GOVERN OURSELVES. Failing to govern the self within the generous metes of properly contrived rules, we bring the governance of our fellows upon ourselves in compensation. Without this, there is no reason that anyone should _of necessity_ control themselves. I would assert that most people would likely do so just because they are of such an amiable nature as not to wish any conflicts between themselves and their neighbors. But there are always that small minority who refuse to respect the rights of their fellows and act accordingly as they run roughshod hither thither. For such people must corrective measures be taken, either sooner or later, because so far as I can see, such people when left unchecked only become more stridently disrespectful of others.

We could have the law of the jungle, so to speak, where a given offense of one man against another might meet with widely varying consequences depending upon whom the offense is made, and perhaps even depending upon a given man's mood at any given time. Monday morning might see Johnny smack Jimmy for stealing a stick of his gum and Monday afternoon might bring gunshots. Perhaps some rules for dealing with such things would be a good idea? Assuming so for argument's sake, the question then arises regarding who will apply these rules. As far as I am concerned, it could be the aggrieved party so long as application is done knowledgeably and with proper fairness. Makes me no mind at all. Or, we could have courts or tribunals or give it to the minister or a computer sufficient to the task. The salient point is that the rules exist such that we can all become aware of them. They can be called anything you like - anti-trust laws, tort laws, criminal laws, "boojum"... the label matters not, so long as you are consistent with it.




> The free market does allow for boycotts against a company if they are seen to be engaged in business practices they do not agree with.


Agreed, but boycotting is not always enough. What about when a real tort is committed? Your company's product is killing people who are dropping like flies? Yes, the market may put them out of business, but what of their responsibility toward those they have harmed? Are such people expected to simply "walk it off"?




> This is superior to a government solution since the market decides


I believe you are conflating two separate issues. Markets decide on winners and losers who continue to buy the products of the winners and stop buying those of the losers. The market chose Chevy over Delorean and Yugo. They chose Coke Classic over the New Coke. But the market, taken abstractly, determine what happens when the Ford Pintos start exploding in highway accidents. That becomes a matter of tort equity and possibly even criminality and that mostly boils down to individuals conflicting with large groups (corporations, for example). In this "the market" becomes a market of one and the choice it makes is to try to hold the offending party accountable. Such parties are very often in no humor to be so held and will move heaven and earth to avoid their rightful culpability. That is where rules and the possible application of force comes validly into play.




> Education is key, but in many cases there can be added safeguards put in place by other companies. For example, retails can set and publish their own boycott criteria and refuse to carry some companies products, consumers who like the boycott criteria would appreciate that service and shop there knowing they don't have to worry they are supporting something that is harmful.


All well and good and what I may term "morally praiseworthy". But "can" does not mean "will". It is great to see people who choose the high road. Those are not the people for whom the threat of force has been set into place; it is for the scoundrels who often stop at very little in order to get what they want at the unjust expense of ohers.




> When the government sets antitrust law the exact terms and application of the law can and will get twisted to favor the politically connected.


Perhaps, but that does not invalidate the need for rules, assuming the avoidance of general chaos in a world that has trained itself for one man to endeavor to take that which rightfully belongs to another without adverse consequence.





> That said, this solution won't work well for us now since our system favors corporations and drives their growth at the expense of being self-supporting. The cancer needs to be completed rooted out, starting with the IRS.


This is a very important point that cannot be overemphasized. The cycle must be broken. Simply removing one or two choice elements from the mix will not solve the problem. A thorough cleansing down to the roots is absolutely mandatory if we are to have the least rational hope of making for us a better world.

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## Slutter McGee

I am going to go ahead and reply to this with my own take, and then there are a couple things from Osan's take that I would like to respond to in another post.

[QUOTE=Bryan;5797617]Without reading everything here...




> Certainly it can be problematic for one company to gain a monopoly on something but that's also not a guarantee it will "do bad things".


Very true, monopolies born out of innovation are a good thing because they often create more welfare than the deadweight loss that comes from monopoly pricing. (Yes I realize that true monopolies to not exist, The classical model that Osan uses is certainly helpful but, but certainly these firms with extremely high market share don't actually set prices at monopoly level. I'm still going to use the term monopoly pricing for simplicity though.)




> In a truly free society there would not be antitrust laws, but that does not mean that its people have to be OK with all companies. The free market does allow for boycotts against a company if they are seen to be engaged in business practices they do not agree with. This is superior to a government solution since the market decides.


I like this idea ideally, but the major problem I see is not so much monopoly that stifles innovation, but instead price fixing. Business with close to monopoly marketshare are generally easier to spot, and the consumer can make these decisions. 

But Oligopoly is far different when those business form a cartel and price fix. One major problem is that the successful ones uses price fix intermediate goods, and it is harder to spot the cartel forcing up a price by 3 cents on thousands of different final goods. 

The information simply is not there for the consumer to make decisions on weather to boycott, and more specifically who to boycott.




> Education is key, but in many cases there can be added safeguards put in place by other companies. For example, retails can set and publish their own boycott criteria and refuse to carry some companies products, consumers who like the boycott criteria would appreciate that service and shop there knowing they don't have to worry they are supporting something that is harmful.


Sure they can, but again, most of the time retails don't have any idea prices are being fixed because they sell the final good. Companies may also have incentives to try and claim a company is a monopoly when it is not. I sell goods to walmart, they force me to sell to them at only slightly higher than my marginal cost. They are so big I have to have their business. We all agree this is good for consumers, but I claim Walmart is practicing predatory pricing. My point is that information is not always correct, and this causes certain frictions in the market.




> When the government sets antitrust law the exact terms and application of the law can and will get twisted to favor the politically connected.


I disagree with you here a little bit. The laws aren't twisted in favor of anyone. The problem is that Congress flat out exempts certain industries from the law all together. I think this distinction is important. 

Anyway, just a few of my thoughts.

Slutter McGee

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## Slutter McGee

> Depends on the definition of "bad". In microeconomics it is a well know fact that monopolies will always produce less of a given product than the market demands. It is something of a counterintuitive reasoning behind it and I do not recall the details at this moment, but it is nevertheless a fact.


I'm going to try and sum up what you are saying, but also point out that monopoly can actually lower price if it is the result of innovation. Optimal output for a profit maximizing firm is where Marginal Cost (MC) and Marginal Revenue (MR) are equal. In a perfectly competitive market Price = to MR, but in a monopoly situation we can find MR by taking the derivative of the total revenue. This is going to lead to a MR curve that moves inward.

The problem is this classical model doesn't take into account cost reductions that might come from tech innovation.

For example. There are 2 perfectly competitive firm competing in a Bertrand game. So they each undercut each other so that their Nash equilibrium is that they both sell at MC. Lets set the inverse demand curve at P = 1-Q and assume MC = (3/4) for both firms. Lets ignore fixed cost for simplicity.Setting MC=MR=P we get (3/4=1-Q) Solving for this we get Q(total)=(1/4). For the individual firms that gives out put of q1 = (1/8) and q2 = (1/8). Putting Q in our inverse demand function we can solve for P=(3/4).

But lets say firm 1 innovates and is able to lower their marginal cost to 0. Not practical I know, but the number need not be 0. Again, just to make the math easier. This allows firm 1 to undercut firm 2 and P= (3/4) minus epsilon (or the tiniest bit possible.) (lets keep their price at 3/4 but recognize it is actually 3/4 minus epsilon...just for simplicity. Firm 1 can no longer compete goes away. giving monopoly power to firm 1.

So firm 1 has a new MR curve. Total revenue is (1-Q)Q or P*Q. Taking the derivative of 1-Q^2 will give us MR=1-2Q, the MR you were referring to in your post. Of course now MC = 0 so setting MR=MC for profit maximization we get 0=1-2Q. Solving this we can get Q= (1/2) and P=1-(1/2) will give us P=(1/2). 

As you can see, Price is lower and Quantity is higher under the newly created monopoly.





> That is what I mean when I say that rational monopolies do "bad" things _of necessity_.  It is in their rational self-interest to do them... Either way, somebody is taking it in the neck and this is why monopolies are bad for economies and human freedom in general.  It's all there in the numbers, which in this case really are not lying.


My main point is that monopolies are not always bad. And monopolization born out of innovation can actually be very good. You were correct in your assessment that the deadweight loss monopolies create is bad, but this can be offset by the lowering of cost based on innovation. So it becomes important that we make a distinction between monopolies that are born out of innovation, and those created through other means.



> Moving from our current position to that would, of course, result in some terrible things happening, but after the period of adjustment, the new equilibrium would IMO prove vastly superior to the old.


I am not really following where you are going with this train of thought. In this paragraph or the next one.




> Once again, this predicates largely on the precise definition of "truly free" and what, exactly, defines "anti-trust". That last bit is not mere pedantic foolery, either.  Ask any law professor what defines anti-trust law and a likely response will be "nobody really knows".  The anti-trust laws are devised in so befouled a manner as to specify virtually nothing with clarity, which in itself should tell you much about the nature of the American version.


Agree to some extent here, The Sherman Act was incredibly vague, and the Clayton act not much better. A whole host of anti-trust issues have been interpreted a dozen different ways, causing a lot of harm, especially when these laws are used against companies that are creating more welfare and bettering our society. I would differ with you on one part of this though, and that is the interpretation regarding price fixing. That has always (almost) been interpreted as per se illegal. This is the one area of anti-trust where consumers, politicians, and economists almost always agree. There are only a few examples that differ like the BMI case where transaction costs would be such an incredible detriment that price fixing becomes a necessity. This is the one area (along with patents) where I definitely find issues with Austrian notions that the free market will correct it on its own. Perhaps it will, but how much damage will be done between then and now.




> The salient point is that the rules exist such that we can all become aware of them. They can be called anything you like - anti-trust laws, tort laws, criminal laws, "boojum"... the label matters not, so long as you are consistent with it.


There was a lot of philosophical ideas that I didn't really want to respond too, but please correct me if I am wrong in what I think you are saying. Anti-trust laws might be justified because they make us aware of coercion. If that is the case then I might agree especially with Price fixing issues. This is something that may not be evident at all to the consumer without these laws.




> Agreed, but boycotting is not always enough. What about when a real tort is committed? Your company's product is killing people who are dropping like flies? Yes, the market may put them out of business, but what of their responsibility toward those they have harmed? Are such people expected to simply "walk it off"?


It sounds like your answer to anti-trust issues is tort, but I see a major problem here. Judges don't understand economics, and certainly aren't going to learn calculus. Leaving these issues uncodified still may leave the issue to private suits, but the outcomes are often going to be based on the most convincing lawyer instead of any real economic realities.





> I believe you are conflating two separate issues. Markets decide on winners and losers who continue to buy the products of the winners and stop buying those of the losers. The market chose Chevy over Delorean and Yugo. They chose Coke Classic over the New Coke. But the market, taken abstractly, determine what happens when the Ford Pintos start exploding in highway accidents. That becomes a matter of tort equity and possibly even criminality and that mostly boils down to individuals conflicting with large groups (corporations, for example). In this "the market" becomes a market of one and the choice it makes is to try to hold the offending party accountable. Such parties are very often in no humor to be so held and will move heaven and earth to avoid their rightful culpability. That is where rules and the possible application of force comes validly into play.


Sure, but the issue then becomes how do we hold the party accountable. As I showed earlier, monopoly pricing can actually be a good thing. What apparatus should we use? The DOJ and FTC, for all their issues, employee a lot of economists. Very few cases actually get tried. I find this a far better solution than private suits.

Anyway, I look forward to your reply.

Slutter McGee

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## helmuth_hubener

> as soon as I challenge or answer you, instead of looking it up, studying and challenging back, you just ignore everything said and repeat the same goddamn thing over again.


Hey, sorry if you are offended by the way I answer you!  As I explained:

Stable cartelization cannot exist.  You think it can.  You're misinformed.  And I told you, let's just set that aside.  I could present evidence and proof and logic and reason for 100+ pages as I did with, say, Georgism, and then in the end, you would be even more convinced of the things of which you are convinced now.  It's a psychological phenomenon.

For Georgism, that was OK, it was fun, but for anti-trust?

Come on.

Not worth my time.

So we set that aside and move to the crux of the issue.  Which is the following:

The boogieman of Big, Bad monopolies and cartels on the Scary, Unregulated market just might be the lamest boogieman ever.  Here we have a boogieman that has not harmed my life in any way, has not caused me any pain, has not caused me any problem whatsoever.  Nor has it caused you any tangible, measurable problem.  It has not upset the lives of anyone on this thread.  It's a non-problem!  The world is full of vitamins!  They're cheap!  They're available!  There's a total lack of a problem!  This is about the furthest thing from anything a normal person would label "a problem" as one could imagine!

Same thing with soda pop.  Same thing with whatever example you want to bring up.  There's just no issue.  *It's a boogie-man that doesn't even have any boogie!*  Lame sauce.

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## helmuth_hubener

> Adopt a more adult tone and we will be able to have exchanges of a more civil nature.


 I am sorry you're offended by my tone!  Please read my posts using a different (more adult) tone of voice in the future.  Perhaps that will solve the problem.

Our disagreement is this:

You say that "artificially erecting a barrier for entry into a market" is a tort which should be punishable by tort law.

I say that it clearly is _not_.  It infringes no one's person nor property.  "No puppies were harmed in the erection of this artificial entry-barrier."  (Unless I owned the puppies.)

It's possible that I am mistaken and haven't thought of something.  It's possible that you are defining "artificial erection of a barrier for entry into a market" differently than me.  It's possible that there exist actions which you are calling "artificial erection of a barrier for entry into a market" which really are torts.

So, *could you give just a single, clear, defined, described action which I can understand which, to you, would constitute an "artificial erection of a barrier for entry into a market" which you think should be actionable as a tort?*

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## helmuth_hubener

Let me give you a real example of "monopolization", Slutter, since your examples were so obscure and lame:

Right now Amazon Web Services has, I would estimate, approximately 98% of the market they're in.  Every once in a while you'll run across someone using Rackspace, they have probably about 1% of the market.  No one uses Google's nor Microsoft's services.

So, if you are a start-up business with an internet-based offering, you are using AWS.  They _all_ are.  

And.... what's the problem, again?

There is none!  Amazon's killing it, providing a terrific service for a terrific price.  As a start-up founder, you are greatly benefiting from this.

So, what's the solution to this?

There is none, not that makes any sense.  Force a certain percentage of people to buy from the inferior competing services?  (What percentage?  How do you decide who gets to stay and who has to go?)  Break up Amazon Web Services into multiple pieces?  Somehow force Amazon to make their value proposition less attractive so that their market share will go down to a more reasonable, non-monopolistic level?  We could do the Osan model plan and sue them in tort court and force them to pay millions of dollars to... someone... against whom they aggressed, I guess.... somehow.  Or, OK, maybe they didn't aggress against them, maybe just hurt their feelings. 

So there's no solution that makes any sane sense, but that's OK, because let me remind you: there's also no problem to solve!  It works great!

_This_ is what works great:

*Let anyone buy anything they want from anyone they want.  Let anyone sell anything they want to anyone they want.*

This is what doesn't:

*Anything else!*

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## osan

> I'm going to try and sum up what you are saying, but also point out that monopoly can actually lower price if it is the result of innovation. Optimal output for a profit maximizing firm is where Marginal Cost (MC) and Marginal Revenue (MR) are equal. In a perfectly competitive market Price = to MR, but in a monopoly situation we can find MR by taking the derivative of the total revenue. This is going to lead to a MR curve that moves inward.
> 
> The problem is this classical model doesn't take into account cost reductions that might come from tech innovation.


All of the micro economic models and their attendant calculations I was taught do very much indeed take innovation into account, which is expressed as part of the cost function.




> Taking the derivative of 1-Q^2


I don't think the derivative of 1-Q**2 = 1-2Q.  Rather, it is simply 2Q.  Constants have no derivative.  That is why when you are integrating f(x) over some interval, the result includes a constant, usu. denoted 'C', which is more or less the y-offset of the function.




> My main point is that monopolies are not always bad


But they always do "bad" things, if they are not regulated otherwise.  But the regulation also is a bad thing.  Therefore, for my money monopolies are generally deleterious to the economy.  I do not advocate banning by force, but do object to state-granted privilege of monopoly.




> . And monopolization born out of innovation can actually be very good. You were correct in your assessment that the deadweight loss monopolies create is bad, but this can be offset by the lowering of cost based on innovation. So it becomes important that we make a distinction between monopolies that are born out of innovation, and those created through other means.


The deadweight losses to the consumer cannot be avoided without regulation when we are talking of a monopoly operating in its rational self-interest.  In this respect, the only thing innovation does is reduce the value of the cost function.  But cost remains and the rationally operated monopoly will still operate as a detriment to consumers.  The monopoly, if rational, is not going to operate as if there was competition.  If they do behave, then they are not rational.  It is a simple matter of definitions.





> I am not really following where you are going with this train of thought. In this paragraph or the next one.


I thought it was fairly clear.  Proper accountability for one's actions v. the nonsense that is enforced by "law" would result in a happier, saner world.  We now employ force against people for non-criminal acts.  Guy buys a hooker and ends up in jail.  Lady lights a joint, jail.  Fail to pay taxes - jail.  And so forth.




> Agree to some extent here, The Sherman Act was incredibly vague, and the Clayton act not much better. A whole host of anti-trust issues have been interpreted a dozen different ways, causing a lot of harm, especially when these laws are used against companies that are creating more welfare and bettering our society. I would differ with you on one part of this though, and that is the interpretation regarding price fixing. That has always (almost) been interpreted as per se illegal. This is the one area of anti-trust where consumers, politicians, and economists almost always agree. There are only a few examples that differ like the BMI case where transaction costs would be such an incredible detriment that price fixing becomes a necessity. This is the one area (along with patents) where I definitely find issues with Austrian notions that the free market will correct it on its own. Perhaps it will, but how much damage will be done between then and now.


One either has free markets or has something else.  If costs are such a hazard, then perhaps there is no actual and free market for the product or service in question.  If there is a real market, customers will accept the costs.  It is as simple as that.  BTW, the BI case, as well as others such as Socony and Applalachian coal, are absolute cluster copulations WRT price fixing, with all manner of nonsense about the rules not applying _literally_.




> There was a lot of philosophical ideas that I didn't really want to respond too, but please correct me if I am wrong in what I think you are saying. Anti-trust laws might be justified because they make us aware of coercion.


No. Anti-trust laws are superfluous - redundant, and in the case of real US antitrust, not to be... erm... _trusted_.

If that is the case then I might agree especially with Price fixing issues. This is something that may not be evident at all to the consumer without these laws.






> It sounds like your answer to anti-trust issues is tort, but I see a major problem here. Judges don't understand economics, and certainly aren't going to learn calculus. Leaving these issues uncodified still may leave the issue to private suits, but the outcomes are often going to be based on the most convincing lawyer instead of any real economic realities.


Your point is well taken, but I would maintain that tort is the answer.  That tort may place a burden upon juries... well, tough poo.  But I certainly get your point and understand that such a situation could lead to all manner of miscarriages of just equity verdicts and rulings.  But the question then arises: would specific and presumably competent anti-trust law fix this potential problem?  It just appears to me that in this case anti-trust law would constitute a very narrow and deep branch of tort law, put in place because of the great technical difficulties such cases may at times present.

The better solution, in my eyes, is to remove all restrictions on monopolies and oligopolies.  Let them collude all they want, but under certain conditions.  Firstly they cannot conspire to bar competition.  Secondly, there would be no more state-endowed privileges of monopoly.  Power companies and the sort would be stuck with "perfect" competition.  If you can maintain your monopoly, then goody for you.  But if you cannot, do not look to government to pull your bacon from the fire.  With this, all rights of way become public domain and must be shared.... utility and phone poles, for example.  That could get messy, but if the problems become bad enough, let the players innovate their ways out of them.  That is the right way to do things.  The current way is lazy or it is the result of wanting something for nothing - like  guaranteed market.






> Sure, but the issue then becomes how do we hold the party accountable. As I showed earlier, monopoly pricing can actually be a good thing. What apparatus should we use? The DOJ and FTC, for all their issues, employee a lot of economists. Very few cases actually get tried. I find this a far better solution than private suits.
> 
> Anyway, I look forward to your reply.
> 
> Slutter McGee


We have all the mechanisms we need - we just need to use them properly.  If I design the Ford Pinto and market it knowing that in certain types of impacts the gas tank will explode and the passengers turned to crispy critters, I am CRIMINALLY liable for such death and injury.  The excuse Ford officials made about the $11 additional cost for putting in a proper tank should cut no mustard and, in fact, should serve as proof of criminality.  Those responsible should see prison time and the company required to pay for what they have done.

If indeed the cost increase would have eaten heavily into the market for the Pinto, then perhaps Ford would have been well served to re-examine that market and possibly decide that it simply did not pay to go there.

Most of these issues really do boil down to simple answers.  What complicates things most are the conflicting interests.  Ford wanted the extra market share and were willing to see a certain number of their customers burn to death or be horribly maimed by their failed products in order to get it.  I would call that malice aforethought.  They knew, they did anyway... what part of that is not felonious and deserving of a life sentence?

Had they not known and could not have reasonably become aware, they would then only be liable for the tort in $-terms.  Had they now known and should have known as per the reasonable man standard, perhaps a lighter criminal sentence would be in order.

The point is that the mechanisms are there.  Congress and other legislatures are far too fond of complicating things with endless pages of redundant, conflicting, and outright stupid statutory enactments.

----------


## helmuth_hubener

> So I know this doesn't happen much on the internet, but I agree with some of your theme here. Yes, government mandates that electricity be a certain way. Yes, the reasoning you outline above is circular. That said, can you describe a system in which there is free and unlimited competition in the electricity market?


  Thank you for your generous and genial words, I think I can point to such a system.  The USA had just such a system in the early days of electrical distribution, starting about 1882.  The Edison companies were totally private market companies.  They'd go in, build a plant with a couple engines and dynamos, run some wires, and charge subscribers.

There is no reason we could not have several companies in a single town who run cabling, several who own and maintain cabling (perhaps the same ones as the runners, perhaps different), and several who provide services through those cables, along with many sub-contracts and virtual network operators.

Let me give you an industry that I think will help you imagine what I'm proposing. In mobile telephony in the US, a guy will have about four major networks to choose from, along with one or two additional regional or super-regional networks.  Physically, there may be only one or two towers with the range to reach his house (or there may be eight).  And then there are dozens, approaching hundreds, of what's called MVNOs, like Tracfone, who buy data wholesale from one or more of the non-virtual networks and resell it to customers.  From the customer's perspective, the experience on the MVNO is completely different than the one on the company with the parent network -- it's a different business with a different pricing structure, different customer service, different everything.  So within a fairly constrained and limited network physically-speaking, there is an abundance of competition and choices.

Electricity could be like that.  In fact, the technology to do it for cabled services is _less_ advanced than what's been required to build this system for cable-less services.  Edison was burying electrical cable from day one.  Having it perched on poles is... one option.  It is not necessarily the most robust one.

There is so much advancement that could take place in this industry.  In the early days, there was tons of innovation: the feeder and main system, the three-wire system, metering, high-tension long-distance distribution, and on and on!  The last fifty years: zip!   They still have to drive the truck around to read the meters, for heaven's sake, even with their lame, last-century "wireless" meters that they are only now starting to put in!




> If I was a company that wanted to run electric cable through a city, I have the right to do so - same as any other company because we're all equal, right? Now, multiply that by N, or any other large integer - you see where this is going? A market like this quickly gets crowded with multiple competing electrical distribution lines that run rampant all over town - hardly a desirable outcome for a city to have, but one they really can't prevent right?


 And *why* would that not be desirable?  Have you really thought this through?  Why would it be a problem if 10, or 20, or 100 companies all want to spend thousands or millions of dollars running redundant (or seemingly-redundant) cabling around town? (Redundancy is a very good thing to have, by the way, for reliability and resiliency of a network.)  How would this hurt me, personally, as a customer?

It would be nothing but good.  It might hurt _them_, the companies, because there might not be enough demand for a 97th electricity provider to pay them back for their investment running the copper.  But for the customers, it's great!  Bargain-basement prices!  More entrants into the market doesn't hurt customers.  Just gives them one more suitor, courting their money.  They can always say no and stick with what they've got.




> I get your theme, I really do. I am looking at the system *as it is* and not as it *should be*.


 I am looking at things as they are, also.  There is plenty of room underground for more cabling.  There is plenty of conductive metal in the world.  The technology of ditch-digging is well-established and is becoming more advanced than ever.  There exists no technical barrier to a polycentric, competitive electrical market.

And in fact, it's the only system that makes sense.  Just as with everything else:

*Let people buy electricity from and sell electricity to whomever they want, however they want, whenever they want, whyever they want.*

----------


## helmuth_hubener

> Firstly they cannot conspire to bar competition.


 Again, what, specifically, does it mean to "conspire to bar competition"?  Could you give us all a specific example of a specific action?

----------


## Mr Tansill

> Thank you for your generous and genial words, I think I can point to such a system.  The USA had just such a system in the early days of electrical distribution, starting about 1882.  The Edison companies were totally private market companies.  They'd go in, build a plant with a couple engines and dynamos, run some wires, and charge subscribers.
> 
> There is no reason we could not have several companies in a single town who run cabling, several who own and maintain cabling (perhaps the same ones as the runners, perhaps different), and several who provide services through those cables, along with many sub-contracts and virtual network operators.
> 
> Let me give you an industry that I think will help you imagine what I'm proposing. In mobile telephony in the US, a guy will have about four major networks to choose from, along with one or two additional regional or super-regional networks.  Physically, there may be only one or two towers with the range to reach his house (or there may be eight).  And then there are dozens, approaching hundreds, of what's called MVNOs, like Tracfone, who buy data wholesale from one or more of the non-virtual networks and resell it to customers.  From the customer's perspective, the experience on the MVNO is completely different than the one on the company with the parent network -- it's a different business with a different pricing structure, different customer service, different everything.  So within a fairly constrained and limited network physically-speaking, there is an abundance of competition and choices.
> 
> Electricity could be like that.  In fact, the technology to do it for cabled services is _less_ advanced than what's been required to build this system for cable-less services.  Edison was burying electrical cable from day one.  Having it perched on poles is... one option.  It is not necessarily the most robust one.
> 
> There is so much advancement that could take place in this industry.  In the early days, there was tons of innovation: the feeder and main system, the three-wire system, metering, high-tension long-distance distribution, and on and on!  The last fifty years: zip!   They still have to drive the truck around to read the meters, for heaven's sake, even with their lame, last-century "wireless" meters that they are only now starting to put in!
> ...


Thanks for your very detailed response. I think I maybe didn't give enough detail in my earlier critique, but what I was trying to get at is the fact that it's really not possible to have unbounded growth in a market like electricity because of its dependence on physical landlines for transmission. You cite we could have 10, 20, or 100 companies all competing for our $$$, and I agree that is a good thing, but it's not where my "thought experiment" was intended to lead.

I'm talking about the cable required to have 10,000, or a million, or a billion, or 10^80 companies provide infrastructure for a city - this is admittedly ridiculous, and isn't meant as a serious suggestion, but rather to show the inevitability of the impending collision between the "corporate right" to access a particular market (in this case the hypothetical electricity market) and the "individual right" to preclude more of their property being taken via the use of _eminent domain_ - which is the crux of the point I attempted to make previously. I chose "electricity" simply because of its reliance on land lines, and an easy parallel I saw to how the internet is delivered to people's homes.

So the CORE reason I see that these companies NEED to be regulated is because their business model required and is enabled by the application of eminent domain - their businesses could not function without the application of that concept, and therefore is why I think they need to be regulated. It's necessary to place a reasonable limit on the amount of land that is taken to run cables, etc.

----------


## Bryan

> Depends on the definition of "bad".


Absolutely, which is why I put it in quotes- which obviously isn't totally clear.




> In microeconomics it is a well know fact that monopolies will always produce less of a given product than the market demands. It is something of a counterintuitive reasoning behind it and I do not recall the details at this moment, but it is nevertheless a fact. When determining the volume of production, businesses use certain calculations. For monopolies the results are of necessity different from those of other sectors where competition exists. This is good for the monpoly in question, but is presumably bad for the market and does, in point of fact, render that particular market unfree in some manner and degree.


Agreed on most accounts. I would not say that it is a fact that monopolies act that way, it's a fact it is in their best interest to and the data shows they generally do.





> That is what I mean when I say that rational monopolies do "bad" things _of necessity_.  It is in their rational self-interest to do them.  If we regulate that behavior away, which we typically do either by prohibiting them from acting in accord with their economic best interests or, far more commonly by regulating pricing upward to the detriment of the consumer and to the benefit of the monopolist, we have retained the element of coercion, which so many appear to rail against.  There is _of necessity_ no free market where monopolies are concerned and this absence is a matter of economic science on the one hand, or political interference on the other.  Either way, somebody is taking it in the neck and this is why monopolies are bad for economies and human freedom in general.  It's all there in the numbers, which in this case really are not lying.
> 
> In and of itself, coercion is not evil.  The evil arises in the nature of specific instances of coercion.  In the vast majority of cases that I have seen, the coercions in question are in fact evil as all hell.  But will we call the coercion to not commit murder, fraud, and other very serious crimes evil?  I would think not.


You're really hitting on the crux of the issue here... it's about morality, ie: what is evil vs not? 





> Once again, this predicates largely on the precise definition of "truly free" and what, exactly, defines "anti-trust". That last bit is not mere pedantic foolery, either.  Ask any law professor what defines anti-trust law and a likely response will be "nobody really knows".  The anti-trust laws are devised in so befouled a manner as to specify virtually nothing with clarity, which in itself should tell you much about the nature of the American version.


And this is certainly a good part of the problem, the laws can be molded to suite a particular interest.





> Im' not trying to be a PITA here, though perhaps I succeed in any event; I am pointing out that words are tricky, important, and that depending on their precise, or not so precise usage, there could be anti-trust laws in even a free land.


No, you're absolutely correct, we have to be very clear on our terms, as much as a pain as it can be.





> Let us briefly rewind to the basics. To be properly free, at least by my definition, men stand centrally within the circle of their rightful prerogatives to act as they please with the one exception that they bring no harm to others, including thwarting their exercise of even rights. That leaves the avenue of possibilities broadly expansive and the restrictions vanishingly narrow. By living in accord with this, the realized potential for freedom and prosperity are optimized to their greatest degree for everyone because opportunity is not being actively diminished by one man against his fellows.
> 
> But as we all know, people are not perfect and are not always angels. Even in the best circumstances one man's understanding of what is permissible may stand in stark contrast to that of another's. When those differing understandings clash, how is the dispute to be resolved?  And when one man's ethics fall prey to his temptations such that he knowingly violates his brother pursuant to sating his desire to have that to which he is not rightfully entitled, we have yet another flavor of conflicting interests.
> 
> When such conflicts arise, how shall they be resolved in a "truly free" society? If rules, however few and well designed they may be, are to have any meaning, then they must be backed with the promise of force against those who refuse or otherwise fail to toe their line. Without it, where is the incentive for "bad" people to behave themselves in accord with those rules? Indeed, without the specter of force behind them, rules become naught but mere suggestions to be respected or ignored as one pleases at any given moment.
> 
> If we are not to run amok in chaos with the strong consuming the weak or what have you, which for practical reasons tends to be a very undesirable outcome, then we must have a tiny handful of rules by which we GOVERN OURSELVES. Failing to govern the self within the generous metes of properly contrived rules, we bring the governance of our fellows upon ourselves in compensation. Without this, there is no reason that anyone should _of necessity_ control themselves. I would assert that most people would likely do so just because they are of such an amiable nature as not to wish any conflicts between themselves and their neighbors. But there are always that small minority who refuse to respect the rights of their fellows and act accordingly as they run roughshod hither thither. For such people must corrective measures be taken, either sooner or later, because so far as I can see, such people when left unchecked only become more stridently disrespectful of others.
> 
> We could have the law of the jungle, so to speak, where a given offense of one man against another might meet with widely varying consequences depending upon whom the offense is made, and perhaps even depending upon a given man's mood at any given time. Monday morning might see Johnny smack Jimmy for stealing a stick of his gum and Monday afternoon might bring gunshots. Perhaps some rules for dealing with such things would be a good idea? Assuming so for argument's sake, the question then arises regarding who will apply these rules. As far as I am concerned, it could be the aggrieved party so long as application is done knowledgeably and with proper fairness. Makes me no mind at all. Or, we could have courts or tribunals or give it to the minister or a computer sufficient to the task. The salient point is that the rules exist such that we can all become aware of them. They can be called anything you like - anti-trust laws, tort laws, criminal laws, "boojum"... the label matters not, so long as you are consistent with it.


+rep. We need another thread to get into this. 




> Agreed, but boycotting is not always enough. What about when a real tort is committed? Your company's product is killing people who are dropping like flies? Yes, the market may put them out of business, but what of their responsibility toward those they have harmed? Are such people expected to simply "walk it off"?


In these cases that is really a completely different matter.





> I believe you are conflating two separate issues. Markets decide on winners and losers who continue to buy the products of the winners and stop buying those of the losers. The market chose Chevy over Delorean and Yugo. They chose Coke Classic over the New Coke. But the market, taken abstractly, determine what happens when the Ford Pintos start exploding in highway accidents.


My point is that if the market is smart it will do things that will avoid supporting a monopoly because it is in their best interests not to. For example, if Chevy started to use questionable business tactics and started to wipe out all the other car companies, when it came to buying your next car you might say you don't want to buy a Chevy because they are trying to get a monopoly, so every if they are now better/cheaper you'd buy brand X since it's in your overall best interest. 





> All well and good and what I may term "morally praiseworthy". But "can" does not mean "will". It is great to see people who choose the high road. Those are not the people for whom the threat of force has been set into place; it is for the scoundrels who often stop at very little in order to get what they want at the unjust expense of ohers.
> 
> Perhaps, but that does not invalidate the need for rules, assuming the avoidance of general chaos in a world that has trained itself for one man to endeavor to take that which rightfully belongs to another without adverse consequence.


Agreed, this is part of the real challenges.

----------


## Bryan

> I like this idea ideally, but the major problem I see is not so much monopoly that stifles innovation, but instead price fixing. Business with close to monopoly marketshare are generally easier to spot, and the consumer can make these decisions. 
> 
> But Oligopoly is far different when those business form a cartel and price fix. One major problem is that the successful ones uses price fix intermediate goods, and it is harder to spot the cartel forcing up a price by 3 cents on thousands of different final goods. 
> 
> The information simply is not there for the consumer to make decisions on weather to boycott, and more specifically who to boycott.


I agree, this can be a problem, but it's one that is getting easier to do with the internet- it's also why I suggest the use of 3rd parties that provide information, or retailers who limit who they buy from to limit monopolies. 





> Sure they can, but again, most of the time retails don't have any idea prices are being fixed because they sell the final good.


This is where third party researchers can help. You'll also get whistle blowers who can provide leads.




> Companies may also have incentives to try and claim a company is a monopoly when it is not.


Agreed, but you'd also have a similar problem with any government solution. 




> I sell goods to walmart, they force me to sell to them at only slightly higher than my marginal cost. They are so big I have to have their business. We all agree this is good for consumers, but I claim Walmart is practicing predatory pricing. My point is that information is not always correct, and this causes certain frictions in the market.


You'll always have issues like this, the question is how are they managed.




> I disagree with you here a little bit. The laws aren't twisted in favor of anyone. The problem is that Congress flat out exempts certain industries from the law all together. I think this distinction is important.


So you're saying the problem is worse than I'm stating... 




> Anyway, just a few of my thoughts.
> 
> Slutter McGee


Great thread.

----------


## Bryan

I reformulated a better response to this question, breaking the problem down into specific issues with specific axioms for each issue.


*Moral Issues*
Axiom 1: Having a monopoly does not mean that you have done anything morally wrong, all of your property and clients can be justly acquired.
Axiom 2: Antitrust laws only have value when they are back by forcing others to comply, such as with breaking up a monopoly by taking control over resources.
Axiom 3: It is immoral to apply force against others when they have not done anything wrong.
Axiom 4: Antitrust laws that are not based on addressing immoral actions are immoral as they will require force against others who did nothing wrong.
Axiom 5: As the definition and scope of antitrust laws is not limited to immoral actions they are immoral.

*Individual Choice Issues*
Axiom 6: While it can be problematic for one company to gain a monopoly on something that does not guarantee they would do things you don’t like.
Axiom 7: Antitrust laws remove your personal choice of what you find acceptable vs. not acceptable and puts it in the hands of the government.

*Government Power Issues*
Axiom 8: Antitrust laws give more control and power to the government.
Axiom 9: The more power a government has the more likely it will become a target of corruption.
Axiom 10: History and natural law show that the consolation of power will lead to a distortion of that power to favor the politically connected.

*Government Spending Issues*
Axiom 11: The development of antitrust laws, the monitoring of the market for violations and the prosecution of violators requires government spending unless everyone works for free.
Axiom 12: People do not work for free, thus government spending is required.
Axiom 13: Government spending requires additional revenue either with taxes, fees or fines.
<Deferring discussion on the issues with taxes, fees or fines>
Axiom 14: Government taxes and fees remove money from the free market.

*Free Market Alternative*
Axiom 15: The free market offers solutions that can stop undesirable behavior with the use of boycotts and bad public relations. Consumers with limited time can rely on third party research firms for important information or shop at retailors who purchase based on acceptable behavior policies by a company.

*Conclusion*
Free market solutions (Axiom 15) are superior to government solutions which are immoral (Axiom 5), reduce your choice (Axiom 7) and can actually make market matters worse (Axiom 10 and 14). 

Additional considerations could analyze the cost on the market to deal with antitrust laws and how companies unnecessarily distort themselves to adhere to the laws.

----------


## helmuth_hubener

> I'm talking about the cable required to have 10,000, or a million, or a billion, or 10^80 companies provide infrastructure for a city - this is admittedly ridiculous, and isn't meant as a serious suggestion, but rather to show the inevitability of the impending collision between the "corporate right" to access a particular market (in this case the hypothetical electricity market) and the "individual right" to preclude more of their property being taken via the use of _eminent domain_


 I was merely trying to keep this in the realm of what you would see as "the real world" by avoiding changing anything else in society.  In my explanation of how a free market in electricity could work (and has!) governments are still robbing and slaughtering and everything is still as it is in that regard, except for one change that there is now a free market in electricity.  Now that is a _relatively_ free market -- the electric companies and customers are still paying taxes and toeing lines and doing all the things good little citizens should do.  It's just that there's free entrance and free competition in the industry.  Anyone can start a cable-laying company and run cable.

So, what is your problem with this proposal?  It seems to be this: eminent domain exists.  Now I am opposed to eminent domain.  However, assuming eminent domain continues, would there really be a problem?

Answer: no.  Are there going to be a million or a billion or 10^80 companies all wanting to run cable through your backyard?  No, Mr. Tansill, there obviously are not.  You know that's an absurd propisition and are just using it to make a point.  But what is the point exactly?  You're mixing the absurd and the realistic, claiming to be interested in grounded, hard-nosed reality, but then making your conclusions based on a fantastical, imaginary, impossible scenario.  That seems confused.  Let's stick with one or the other, and of the two, I say let's just stick with the practical and realistic.

So, forget about 10^80.  What would a free market in electrical distribution actually look like?  There would be multiple companies.  In some places, there may be two or three separate physical copper cables going to each home.  In other places, there may be only one.  In some places there will be, as today, none at all.  Did you know that?  If you buy 40 acres of unimproved land, you may have to pay upwards of $20,000, $40,000, even $100,000, to get the electrical company to run a line out to your place.  Under my system, instead of having to deal with "the" electric company, you'll have your _choice_ of who you want to run the line.  Perhaps you'll even run your own to the nearest node, retaining ownership of the line yourself and keeping your options open to connect it at the node to whatever network you choose.  After all, if you're paying for it anyway, why shouldn't you own it?  

Anyway, that's in rural areas.  In more developed populated places, lines already exist.  Generally, each home right now has running to it twisted pair copper line (for phone), higher gauge non-twisted copper line (for power), and coaxial line (for television), one of each.  All three of these could, in theory, carry electricity, by the way.  When the market is opened up, that is the base-point it will be starting from.  There may be one or two entrepreneurs in town that then are excited about building an electrical distribution company who will then start laying lines to certain neighborhoods where they think or know there is a demand.  It may work something like this:

https://fiber.google.com/cities/provo/how/

In all likelihood, these new entrepreneurs will likely pair data and other advanced services with the raw electricity, since as long as you're going to the expense of digging a trench, why not fill it up with as much unique value proposition as possible?  Plus, entrepreneurs tend to be innovative people.  No one's going to get excited about, "Hey, let's go to all the effort to start a new company to compete with Neanderthal Power and Light by being exactly like Neanderthal Power and Light!"  They will come up with ideas and fusions and innovations I can't even predict.

In any case, there might be two such people.  There might be five.  There might be none.  It just depends on what entrepreneurs you have in your town, and whether they can get excited about electricity distribution or something to do with it.  They might dig a few trenches along your property line in the back of your backyard or wherever the existing cables lie.  Not a big deal.  Not going to cause any problem.  There is not going to be some sort of trenching Apocalypse, destroying humanity with 10^80th cables upsetting the Earth's gravitational field or something.

Can we agree?  Realistically, not going to be a problem.

Also, eminent domain is absolutely not necessary to such a market.  Do you think Google Fiber needs eminent domain?  Ha, ha, ha, ha, ha!  People would crawl over nails to sign the contracts and give permission to make their entire yard a gaping crater for the next hundred years in order to get this service.

And so your core objection:



> So the CORE reason I see that these companies NEED to be regulated is because their business model required and is enabled by the application of eminent domain - their businesses could not function without the application of that concept, and therefore is why I think they need to be regulated.


...I think is false.

But even if it were true, just because companies use eminent domain (whether "required" by realities or not), it does not then follow that because of that we must forever be stuck under a state-granted or state-run (depending on your locality) forcible monopoly system.  That does not follow.  Even if the eminent domain system remains exactly as it is, we do not need a monopoly.  We absolutely can have competition in electrical provision.  It's very realistic and practical.  It's very doable.  And it would be a great improvement.

There is simply no excuse left not to do it.

----------


## Mr Tansill

At this point, I think we just disagree.

I was using the electricity example as a demonstration to show that at some point, there will be a time where other people's property rights have to be overruled in order to make way for corporate access to a market OR the government will be forced to restrict access to that market. It wasn't meant as a realistic scenario, and I even tried to make that clear by explicitly identifying it's purpose. Sometimes people draft arguments like that to examine the consequence of universalizing a principle. You used it as a launching point to create a scenario with a forest of details I really couldn't follow.

In either case, it was merely meant to explain my thought process behind my position that these companies should have restrictions placed on them because of the reality in which they were created, and through which they have the _privilege_ of operating. In my view, that core, enabling feature they could not, and cannot exist without, is the application (or previous application) of eminent domain. It's my position that easements on property, while I think are necessary, are also attended by special responsibilities - namely, that the corporations who get to profit by having a government imposed right-of-way through someone's backyard in order to conduct business, don't have the right to exploit that _necessary_ monopoly.

Here's my favorite video on the subject:

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## osan

> At this point, I think we just disagree.
> 
> I was using the electricity example as a demonstration to show that at some point, there will be a time where other people's property rights have to be overruled in order to make way for corporate access to a market OR the government will be forced to restrict access to that market. It wasn't meant as a realistic scenario, and I even tried to make that clear by explicitly identifying it's purpose. Sometimes people draft arguments like that to examine the consequence of universalizing a principle. You used it as a launching point to create a scenario with a forest of details I really couldn't follow.
> 
> In either case, it was merely meant to explain my thought process behind my position that these companies should have restrictions placed on them because of the reality in which they were created, and through which they have the _privilege_ of operating. In my view, that core, enabling feature they could not, and cannot exist without, is the application (or previous application) of eminent domain. It's my position that easements on property, while I think are necessary, are also attended by special responsibilities - namely, that the corporations who get to profit by having a government imposed right-of-way through someone's backyard in order to conduct business, don't have the right to exploit that _necessary_ monopoly.
> 
> Here's my favorite video on the subject:


Perhaps this is closer to the truth:



This, closer still:

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## helmuth_hubener

> At this point, I think we just disagree.


 Maybe.  More likely, you don't exactly understand what I'm talking about.  As you put it:




> You used it as a launching point to create a scenario with a forest of details I really couldn't follow.


My unsolicited advice: If you are going to try to use technological arguments to justify your politisophical prejudices, you should try to actually understand the technology.  That is all.

Let me one more time explain,... no, let me sum up:

*Mr. Tansill point, one and only:* These jerks only exist at all  and rake in the dough because of eminent domain.  Because of that, the gov't goons should make (very reasonable, moderate, helpful, and pro-public, of course) regulations kindly guiding the jerks by the hand and preventing them from being quite so jerky.  Is that a fair summary?

*Helmuth's line of defense number one:* Core assertion is false.  Electrical, and what you apparently really want to talk about**: internet, services have been provided in the past with no eminent domain.  None!  Internet is even today widely provided with no eminent domain involved.  None!  No eminent domain!  *Eminent domain is not a necessary prerequisite for the existence of these industries.*  Period.  The single leg your argument was standing on is thus cut off.

*Helmuth's line of defense number two:* Let's temporarily rivet your leg back on, though, just for fun.  If eminent domain _were_ necessary for these industries, it in no way follows that because of that the industries would need to be run on a closed, barred-and-gated monopoly model.  It absolutely does not follow.  The two statements are unconnected.  *"Because eminent domain, therefore gov't-regulated monopoly" is not a logical statement.*

Let's have free entry.  Let's have free competition.  And let's have free*dom!*  Do we disagree about _that_, Mr. T?

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## ClydeCoulter

> At this point, I think we just disagree.
> 
> I was using the electricity example as a demonstration to show that at some point, there will be a time where other people's property rights have to be overruled in order to make way for corporate access to a market OR the government will be forced to restrict access to that market. It wasn't meant as a realistic scenario, and I even tried to make that clear by explicitly identifying it's purpose. Sometimes people draft arguments like that to examine the consequence of universalizing a principle. You used it as a launching point to create a scenario with a forest of details I really couldn't follow.
> 
> In either case, it was merely meant to explain my thought process behind my position that these companies should have restrictions placed on them because of the reality in which they were created, and through which they have the _privilege_ of operating. In my view, that core, enabling feature they could not, and cannot exist without, is the application (or previous application) of eminent domain. It's my position that easements on property, while I think are necessary, are also attended by special responsibilities - namely, that the corporations who get to profit by having a government imposed right-of-way through someone's backyard in order to conduct business, don't have the right to exploit that _necessary_ monopoly.
> 
> Here's my favorite video on the subject:


The comparison to delivery of more packages to delivery of lots of data being profitable is comparing oranges to rotten apples.

Building larger pipelines to push greater amounts of data doesn't increase profit (but eats it) without raising rates.  But, delivering more packages does increase the profits of UPS and other carriers.

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## helmuth_hubener

> *Moral Issues*
> Axiom 1: Having a monopoly does not mean that you have done anything morally wrong, all of your property and clients can be justly acquired.
> Axiom 2: Antitrust laws only have value when they are back by forcing others to comply, such as with breaking up a monopoly by taking control over resources.
> Axiom 3: It is immoral to apply force against others when they have not done anything wrong.
> Axiom 4: Antitrust laws that are not based on addressing immoral actions are immoral as they will require force against others who did nothing wrong.
> Axiom 5: As the definition and scope of antitrust laws is not limited to immoral actions they are immoral.
> 
> *Individual Choice Issues*
> Axiom 6: While it can be problematic for one company to gain a monopoly on something that does not guarantee they would do things you don’t like.
> ...


That sums it up!  To be strictly accurate, libertarian-wise, rather than "morally wrong," "done anything wrong," and "immoral actions" I would say instead aggressive actions.  Whether or not an action is moral isn't really the point.  In fact, it's irrelevant.  Likewise, whether or not an action "harms" anyone (osan's criterium) is irrelevant.  What is relevant is: did the actor aggress?

I can set up a Big Scary Consulting Company and conspire to keep little guys like osan out of the consulting business all I want.  That is not an act of aggression.  It's not a tort.  It's not anything.  It's a business decision I am well within my rights to make.  It won't _work_, but I can do it 'til the cows come home.

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## kcchiefs6465

> I reformulated a better response to this question, breaking the problem down into specific issues with specific axioms for each issue.
> 
> 
> *Moral Issues*
> Axiom 1: Having a monopoly does not mean that you have done anything morally wrong, all of your property and clients can be justly acquired.
> Axiom 2: Antitrust laws only have value when they are back by forcing others to comply, such as with breaking up a monopoly by taking control over resources.
> Axiom 3: It is immoral to apply force against others when they have not done anything wrong.
> Axiom 4: Antitrust laws that are not based on addressing immoral actions are immoral as they will require force against others who did nothing wrong.
> Axiom 5: As the definition and scope of antitrust laws is not limited to immoral actions they are immoral.
> ...


This.

Simply put, the supposed benefit gained is at the cost of the many. Any appreciable 'order' or 'fairness' gained is subtracted, one, from the relative freedom we all enjoy (as governments who are authorized by the people to infringe on rights to do 'A', 'B', or 'C', will necessarily do 'A', 'B', 'C', and 'D'), and two, it is subtracted by what they take in the first damn place!

So someone might temporarily try to fix the price in a given sector (absent government declaration and protection) by a few cents on a thousand different products (as incredible as that sounds). Well naturally the solution is to take a few dollars (probably a lot closer to ten or twenty dollars) from every _one_.

It's good that people notice a problem in whatever degree they do but trying to fix the problem by preemptively creating the problem is not the answer. Clearly it cannot be.

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## Mr Tansill

> Maybe.  More likely, you don't exactly understand what I'm talking about.  As you put it:
> 
> 
> 
> My unsolicited advice: If you are going to try to use technological arguments to justify your politisophical prejudices, you should try to actually understand the technology.  That is all.
> 
> Let me one more time explain,... no, let me sum up:
> 
> *Mr. Tansill point, one and only:* These jerks only exist at all  and rake in the dough because of eminent domain.  Because of that, the gov't goons should make (very reasonable, moderate, helpful, and pro-public, of course) regulations kindly guiding the jerks by the hand and preventing them from being quite so jerky.  Is that a fair summary?
> ...


No, we don't disagree about freedom. Your assertion that the internet is not enabled by eminent domain is just that: an assertion of the opposing claim, and doesn't actually address the argument, or prove anything different. At best, it represents the fact that one of us is incorrect about the truth of that statement.

How exactly do you propose we have free competition? Should X ISP be forced to allow bits from a website that doesn't pay a fee to travel along their pipes? Not if that company accesses others' private property to deliver their service. But they don't, and that's our disagreement. I say that the internet is enabled by eminent domain (or has been previously) - you say it hasn't. That's the core difference here. Now, I ask this: Would a local government allow an individual to cut cables traveling on or over an individual's property who decided they no longer wanted them there? No they wouldn't. If you think they would, then so be it - I guess in _that_ universe eminent domain is not required - though I think folks' internet connection will be pretty slow...

To your second point - again, we just purely disagree, because I think we both understand the terms we are talking about, though I am going to clarify my point to be sure: I don't think that a _government monopoly_ necessarily follows from eminent domain. What necessarily follows is _government regulation_ of that corporation (or corporations) that benefited from those laws. _Now_, if that's what you think, then I am in complete polar disagreement - allowing a corporation the benefit of the strong arm of the government to establish access to a market (or provide a service, or whatever) without "attaching strings" is allowing corporations the power of the government without the accountability.

I'm all for free competition, but I'm not sure what that looks like with the way the infrastructure of the internet is set up.

Another way to view the situation is this:

1. ISPs advertise a certain speed at which their internet will work (i.e. 5 MB/s, 10 MB/s, etc.).
2. ISPs terms do not include caveats that those speeds only work on a subset of the internet.
3. When ISPs begin to throttle access based on content, they are violating the terms of the contract they have established with their customers.

This situation, IMO, requires government intervention to ensure compliance with contractual obligations.

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## Mr Tansill

> The comparison to delivery of more packages to delivery of lots of data being profitable is comparing oranges to rotten apples.
> 
> Building larger pipelines to push greater amounts of data doesn't increase profit (but eats it) without raising rates.  But, delivering more packages does increase the profits of UPS and other carriers.


Clyde, thanks for watching that video - I think you're incorrect though. I've seen this argument before regarding "amounts" of data vs. "rate" of data, as if there was a difference, so I'm glad to actually have a chance to address it.

1. Companies provide internet connections based on the "rate" of a connection - like 5 MB/s, 10 MB/s, etc. Here are a couple of examples for reference: http://www.comcast.com/internet-service.html and http://www.verizon.com/home/highspeedinternet/.

2. There are a fixed number of seconds in an hour, day, and month (varies...). This happens to be 60 * 60 * 24 * ~30 = ~ 2.6 million seconds/month.
2a) 5 MB/s connection is equivalent to ~13 TB/month.
2b) 25 MB/s connection is equivalent to ~ 65 TB/month.
2c) 28.8 KB/s connection is equivalent to ~ 75 GB/month.

3. Accessing a larger amount of data per month is indistinguishable from having a faster connection speed. The only reason companies advertise using their current "terminology" is because people understand what you can do with a 25 MB/s connection vs a 28.8 kbps connection. They could just as easily offer the "caps" above, and there would be no difference.

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## helmuth_hubener

> No, we don't disagree about freedom.
> 
> I don't think that a _government monopoly_ necessarily follows from eminent domain. What necessarily follows is _government regulation_ of that corporation (or corporations) that benefited from those laws.
> 
> I'm all for free competition, but I'm not sure what that looks like with the way the infrastructure of the internet is set up.


So it sounds like we could both agree to a plan that would do two things:

1. Eliminate eminent domain, and
2. Declare a free market with free entry and free competition.

Is that correct?

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## Mr Tansill

> So it sounds like we could both agree to a plan that would do two things:
> 
> 1. Eliminate eminent domain, and
> 2. Declare a free market with free entry and free competition.
> 
> Is that correct?


100% correct.

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## helmuth_hubener

> 100% correct.


Well, let's toast to that, then!

I do definitely see your point that "with great power comes great responsibility," as applied here: "with large gov't-granted crony privileges come large reels of red tape."  You live by the sword, you die by the sword.  You take the gov't goodies, don't be too surprised there's strings attached.

There are many ISPs, however, that do not use eminent domain directly, that build their networks on already-existing copper and fiber.  They work with telcos, or other players from whom one buys bandwidth like Level3, do peering and aggregation and... well, all kinds of technical and complicated things.  But no filing of eminent domain requests.

There are also whole important distribution methods of the internet that have no eminent domain whatsoever, notably the cell phone towers that stream you your internet with no trenches, no easements, no eminent domain.  Just waves in the air.

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## Slutter McGee

> All of the micro economic models and their attendant calculations I was taught do very much indeed take innovation into account, which is expressed as part of the cost function.
> 
> 
> 
> I don't think the derivative of 1-Q**2 = 1-2Q.  Rather, it is simply 2Q.  Constants have no derivative.  That is why when you are integrating f(x) over some interval, the result includes a constant, usu. denoted 'C', which is more or less the y-offset of the function.
> 
> 
> 
> But they always do "bad" things, if they are not regulated otherwise.  But the regulation also is a bad thing.  Therefore, for my money monopolies are generally deleterious to the economy.  I do not advocate banning by force, but do object to state-granted privilege of monopoly.
> ...


If you don't know how to take a partial derivative then I have no idea what else I can say.

Slutter McGee

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## osan

> If you don't know how to take a partial derivative then I have no idea what else I can say.
> 
> Slutter McGee


Nowhere in your post did you specify a _partial_ derivative.  However, given they relate to multivariate functions, does the idea even have meaning in the world of single-variables?  I don't see it, but that means nothing.  That _was_ a single-variable function, was it not?

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## Slutter McGee

> Nowhere in your post did you specify a _partial_ derivative.  However, given they relate to multivariate functions, does the idea even have meaning in the world of single-variables?  I don't see it, but that means nothing.  That _was_ a single-variable function, was it not?


MR=MC. learn to calculate MR. It is not difficult. Twice the slope for a monopoly or you can take the partial derivative of the total revenue. I am done. Done seeing how posting relatively simple math in this thread is going to help no one.

Good Luck Yall,

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