@xris,
xris;124410 wrote:So lets see what you really believe before this debate go any further. You believe monopolies control the market , yes or no? You believe that when governments interfere with monopolies , create controls, it makes monopolies act against the common good, how so and what harm? You believe there are no adverse effects from monopolies? I would like a brief reply on each question before we go into detail, please Nero.
I don't really know if I see any point in debating you more. You seem to just want to keep believing what makes you feel "moral", looking down at "greed".
I'm not here to cater to your wishes.
And if you are interested in economics, there are many places you can learn this on the internet.
Quote:You believe monopolies control the market , yes or no?
No.
Quote:You believe that when governments interfere with monopolies , create controls, it makes monopolies act against the common good, how so and what harm?
No. Not like that. What I meant was that in the free market a monopoly can't exploit it's customers. Only coercion makes exploitation possible, for example in the form of government mandates or holding a gun in front of the customer to force him to buy the product. But with the help of free market mechanisms alone you can't exploit the customer.
Quote:You believe there are no adverse effects from monopolies?
Not by itself, no.
With your questions answered, I repost my earlier passage on monopolies, which addresses the very questions you raise. You can argue with what I write, but if you just somehow discredit it as a whole, I can't help you.
What I'm saying is that these free market barriers are either counteracted by the opposing free market forces they unleash, or they are not a loss to society. What we're really interested in is not whether a product is produced by one company, what we are concerned about is whether companies have the ability to exploit the customer and thereby society as a whole.
What we also need to note is that all these forces are essentially the same thing for investors. A high danger of losing his investment will for the investor require a higher rate of return to be worth the risk, so risk acts as if it lowers the rate of return. In the same way will having to compete with a brand name that customers perceive as superior and all these other 'barriers', reflect themselves in lower rates of return for the investors.
So what we're looking at is not a bunch of factors that can be combined for ultimate effect, but one number; the rate of return for the investment into a particular product. There are forces that drive this rate up and there are forces that drive this rate down. A monopoly will be protected from competition when this rate of return is lower than what an investor can get by just putting his money on the bank or the stock market.
A company that uses 'predatory pricing' is not a loss to society. I would be very happy if a company should chose to allocate it's capital and the interest it otherwise could earn on it to run it's business at a loss in order to deliver me a product below production cost. Where the potential of exploitation comes in is that this could be used to drive out competitors. And as I have pointed out earlier, that's not that easy to do. It's hard enough to make a profit if you're not selling below production cost. And it is in question whether you can ever make enough of a profit after driving out competitors to ever get that back. Especially since you would have to have abnormally high rates of return which then again would attract competitors. I don't think you can produce an example of this actually happening and so I would say that in the absence of some law or physical reason that protects the company the danger of this is well taken care of by free market forces.
You once noted that I lack the imagination to see the danger of this, I would say that this danger is mostly a problem of too much imagination.
The same is the case for a company that innovates at a rate that nobody can compete with. If it innovates product quality, as for example happens in the technology market, the customer gets a better product than he would otherwise do. This is merely a case of a company out-competing all competitors, with no loss to society.
If the innovation is not going into the product but into production savings, then the company will have a higher profit margin, at which point the investors come in again.
Take the example of some market giant simply buying up every competitor before he can become big. If this giant exploits his situation, meaning it has unusually high rates of return, there will obviously be very many such upstarting companies that hope to see this high rate of return. Investors will give them money easily.
The giant now would have to buy them all up, even the ones that would have failed. Those upstarting companies are probably priced far above their value in terms of what they can actually produce. Which would soak the giant dry.
To avoid this it would have to refrain from exploiting it's situation, and in that case is not a loss to society.
