Without market restrictions, smaller competitors have a stronger chance of breaking into a market and decentralizing the industry. However, dominance by a majority party tends to be the natural order of things. Case in point: the crypto market, how Bitcoin has maintained 50%+ dominance for most of the industry's history while many competitors fight to split the other half.
Im glad you're not simply stating that monopolies could never exist with perfect competition, as even with extremely unregulated markets like crypto currency the market tends towards a pareto distribution where there are almost always a single high performer dominating the market.
With that said, if monopolies can form naturally without any assistance (by gov't, for example), how can a market naturally balance the scales in favor of competition? I say this in reference to Standard Oil, which bought off 90% of the oil business without government intervention, and then started using anti-free market pricing strategies to keep competitors from forming.
I think the drive for competition comes from a natural desire for choice, or at least the illusion of it. Also, geographic concerns tend to lead to some level of competition due to time factors. As humanity expands beyond the Earth's atmosphere, the distance and time required to organize a monopolizing cartel becomes more difficult. This is the same effect that led to the American Revolution, where the central authority was just too far away to be entirely efficient.
Thats a good point, most companies can offer the illusion of choice by diversifying their product lines along different price points or feature optimization.
Ive worked for a few global companies, and the level of control across regions is scary. Many global companies (like Amazon, Apple, and Microsoft) can afford to have offices in every major country, and many times multiple office locations in those same countries. Due to their flat corporate structure in tech companies, they are highly agile to shifting market conditions all across the world, and its scary to think if a company had a complete stranglehold on the global economy they could really shut down local competition.
More recently, its been government intervention thats been trying to hold back the growing influence of these tech companies (GDPR and the lawsuit against Google in the EU come to mind right away), but Im wondering if government is the only way to respond to a growing oligopoly or monopoly, or if theres an free market "event horizon" where a certain level of competition must exist in order to prevent a monopoly from forming.
Speaking of illusion of choice; I previously worked for AT&T and was privy to the fact that they actively work with other internet service providers to negotiate non-compete regions so they can all charge exorbitant prices for sub par services. This primarily happens in suburb and exurb communities. Why I don't believe that regulation is a net positive, to say that there are not specific situations where it has it's merits is equally mistaken. Still though, if having to chose between over-regulation and ancap, i'd take ancap any day. I'm tired of being told what I can and cannot do with the product of my own labor. I am not a slave.
I feel ya, my neighborhood only has comcast and I hate not having any choice or competition. But would you say that AT&T got those non-competes from government regulation or from bargaining with other private companies? I really dont know much about the ISP and cell coverage market.
Std Oil was a monopoly, but they also drove the price of oil down 90% and kept it there for over a century. They literally saved the whales. It is very difficult to maintain a free market monopoly without aggressive price discounting.
But even then Std Oil started to break. Before it was over, they were getting their ass kicked by the oil services industry. They wouldn't offer oil services to smaller competitors who were taking over Texas. The share holders revolted, and got the government to break up their monopoly, separating off their oil services industry. Another example of how on their own, monopolies tend to become bloated and unresponsive to the market.
I dont know, another commenter mentioned the highly unregulated crypto currency market, where Bitcoin consistently dominates 50%+ of the market, even without government intervention at all. I think, especially without reference to an actual historical stateless society, its hard to say monopolies can never form. I also would like your perspective on Standard Oil, which bought up 90% of the oil refinery market without any favorable government regulation.
Maybe by bitcoin is over 50% of crypto currency but what about currency itself?
(I heard it was 4th amongst all currencies. I haven't double checked that.)
If something becomes a monopoly or monopoly like without government then something could still enter the market.
I double checked to make sure, the top two cryptos (Bitcoin and Ethereum) own 81% of the crypto market. Bitcoin has 68.1% and Ethereum has 12.9% . Regardless of your perspective, that does show monopolitistic tendencies even in unregulated markets.
The point being, when does a monopoly/oligopoly become unhealthy for market competition? Because there werent government regulations on what standard oil could do until it became too powerful, and then government (not the market) broke it up with anti-trust laws.
The Bitcoin example is arguably a poor one. Its market dominance exists because it's the most appreciative asset as cryptocurrency's first mover. That is to say, it's naturally the favored coin for speculation and hodlers because it's the best performing asset in human history. This is akin to saying that gold has market dominance in the metals markets. In that sense, neither Bitcoin nor gold really relates to the type of monopoly/oligopoly market supremacy you're discussing wherein an active market competitor controls the heights.
I dont think Bitcoins a bad example, and heres why: the network effect. In economics, a network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Network effects are typically positive, resulting in a given user deriving more value from a product as other users join the same network. In other words, if you have dollars in your pocket, and I have dollars in my pocket, we're more likely to exchange dollars. Crypto currency is a utility, so the network effect applies, as more people use Bitcoin, its easier to exchange Bitcoin.
The original point of using Bitcoin as an example, is to state that even in unregulated markets, theres a central tendency to conglomerate utilitarian resources towards a few (many times one) option(s), rather than spreading all investment on every single crypto currency on the market. People simply dont behave like that, and it shows in terms of market share. The fact that it happens, even without human intention/intervention, shows that the market behaves that way naturally. Monopolies and oligopolies can occur in a completely unregulated market.
It's definitely an example of market preference, but Bitcoin doesn't have a monopoly even if it has market dominance. The two are not synonymous. And even then, its dominance is a feature of its appreciative value the way gold might be preferential asset over other metals, not because of the market's preference for Bitcoin's utility (or lack thereof) which is outmatched by other cryptocurrencies. That lapse in utility is also becoming magnified in the current day. Bitcoin's reign is unlikely to be everlasting as a result, nevermind the one-true-coin believers.
Yes, which is exactly why I ask about when does market preference become a monopoly if driven by human desire to be dominant? Is it merely human intention that causes a market prefernce to evolve into a monopoly, if given enough time and lack of government oversight, or is there an example of market competition eliminating all possible monopolies from ever forming? Can you maybe elucidate how the development of Standard Oils monopoly could have been prevented without government intervention?
There are cases of monopolies that are the result of a single competitor being so efficient, cost attractive and capable of serving its market that it becomes a "natural monopoly" for whatever period it can sustain that. It's the one type of monopoly that isn't viewed dourly because it tends to represent the best possible result for both sides of the equation.
Standard Oil's monopoly, and its inability to maintain it (and why), is described by David Friedman in the Machinery of Freedom. While I can't really do the response real credit here, the simple answer is that it works quite the opposite to what you imply -- without government intervention, Standard Oil couldn't keep competition from breaking their hold. But with intervention, monopolies are more easily captured and maintained.
You can find some of Freidman's answer here (PDF, see the end of page 21 and a few beyond as well as other parts that speak to Standard Oil and more specifically to Rockefeller's unsuccessful strategies.) In all, it's an EXCELLENT read if you're really interested in how free markets topple rather than uphold monopolies and oligopolies.
The premise is that as long as the monopoly business is not engaging in unethical business practices that it doesn't matter if they're a monopoly. All ancap ideology focuses on is barring the unjustified use of force or fraud in interpersonal relations. As long as a big company doesn't break those rules, then they can only maintain monopoly status by doing a fantastic job such that nobody sees an opportunity to compete with them or is able to successfully compete with them. That's perfectly ok in ancap world.
Without market restrictions, smaller competitors have a stronger chance of breaking into a market and decentralizing the industry. However, dominance by a majority party tends to be the natural order of things. Case in point: the crypto market, how Bitcoin has maintained 50%+ dominance for most of the industry's history while many competitors fight to split the other half.
Im glad you're not simply stating that monopolies could never exist with perfect competition, as even with extremely unregulated markets like crypto currency the market tends towards a pareto distribution where there are almost always a single high performer dominating the market.
With that said, if monopolies can form naturally without any assistance (by gov't, for example), how can a market naturally balance the scales in favor of competition? I say this in reference to Standard Oil, which bought off 90% of the oil business without government intervention, and then started using anti-free market pricing strategies to keep competitors from forming.
I think the drive for competition comes from a natural desire for choice, or at least the illusion of it. Also, geographic concerns tend to lead to some level of competition due to time factors. As humanity expands beyond the Earth's atmosphere, the distance and time required to organize a monopolizing cartel becomes more difficult. This is the same effect that led to the American Revolution, where the central authority was just too far away to be entirely efficient.
Thats a good point, most companies can offer the illusion of choice by diversifying their product lines along different price points or feature optimization.
Ive worked for a few global companies, and the level of control across regions is scary. Many global companies (like Amazon, Apple, and Microsoft) can afford to have offices in every major country, and many times multiple office locations in those same countries. Due to their flat corporate structure in tech companies, they are highly agile to shifting market conditions all across the world, and its scary to think if a company had a complete stranglehold on the global economy they could really shut down local competition.
More recently, its been government intervention thats been trying to hold back the growing influence of these tech companies (GDPR and the lawsuit against Google in the EU come to mind right away), but Im wondering if government is the only way to respond to a growing oligopoly or monopoly, or if theres an free market "event horizon" where a certain level of competition must exist in order to prevent a monopoly from forming.
Speaking of illusion of choice; I previously worked for AT&T and was privy to the fact that they actively work with other internet service providers to negotiate non-compete regions so they can all charge exorbitant prices for sub par services. This primarily happens in suburb and exurb communities. Why I don't believe that regulation is a net positive, to say that there are not specific situations where it has it's merits is equally mistaken. Still though, if having to chose between over-regulation and ancap, i'd take ancap any day. I'm tired of being told what I can and cannot do with the product of my own labor. I am not a slave.
I feel ya, my neighborhood only has comcast and I hate not having any choice or competition. But would you say that AT&T got those non-competes from government regulation or from bargaining with other private companies? I really dont know much about the ISP and cell coverage market.
Std Oil was a monopoly, but they also drove the price of oil down 90% and kept it there for over a century. They literally saved the whales. It is very difficult to maintain a free market monopoly without aggressive price discounting.
But even then Std Oil started to break. Before it was over, they were getting their ass kicked by the oil services industry. They wouldn't offer oil services to smaller competitors who were taking over Texas. The share holders revolted, and got the government to break up their monopoly, separating off their oil services industry. Another example of how on their own, monopolies tend to become bloated and unresponsive to the market.
We could name plenty of monopolies. Its either the government or protected by it. Don't worry about a monopoly on a stateless society.
I dont know, another commenter mentioned the highly unregulated crypto currency market, where Bitcoin consistently dominates 50%+ of the market, even without government intervention at all. I think, especially without reference to an actual historical stateless society, its hard to say monopolies can never form. I also would like your perspective on Standard Oil, which bought up 90% of the oil refinery market without any favorable government regulation.
Maybe by bitcoin is over 50% of crypto currency but what about currency itself? (I heard it was 4th amongst all currencies. I haven't double checked that.) If something becomes a monopoly or monopoly like without government then something could still enter the market.
I double checked to make sure, the top two cryptos (Bitcoin and Ethereum) own 81% of the crypto market. Bitcoin has 68.1% and Ethereum has 12.9% . Regardless of your perspective, that does show monopolitistic tendencies even in unregulated markets.
The point being, when does a monopoly/oligopoly become unhealthy for market competition? Because there werent government regulations on what standard oil could do until it became too powerful, and then government (not the market) broke it up with anti-trust laws.
The Bitcoin example is arguably a poor one. Its market dominance exists because it's the most appreciative asset as cryptocurrency's first mover. That is to say, it's naturally the favored coin for speculation and hodlers because it's the best performing asset in human history. This is akin to saying that gold has market dominance in the metals markets. In that sense, neither Bitcoin nor gold really relates to the type of monopoly/oligopoly market supremacy you're discussing wherein an active market competitor controls the heights.
I dont think Bitcoins a bad example, and heres why: the network effect. In economics, a network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Network effects are typically positive, resulting in a given user deriving more value from a product as other users join the same network. In other words, if you have dollars in your pocket, and I have dollars in my pocket, we're more likely to exchange dollars. Crypto currency is a utility, so the network effect applies, as more people use Bitcoin, its easier to exchange Bitcoin.
The original point of using Bitcoin as an example, is to state that even in unregulated markets, theres a central tendency to conglomerate utilitarian resources towards a few (many times one) option(s), rather than spreading all investment on every single crypto currency on the market. People simply dont behave like that, and it shows in terms of market share. The fact that it happens, even without human intention/intervention, shows that the market behaves that way naturally. Monopolies and oligopolies can occur in a completely unregulated market.
It's definitely an example of market preference, but Bitcoin doesn't have a monopoly even if it has market dominance. The two are not synonymous. And even then, its dominance is a feature of its appreciative value the way gold might be preferential asset over other metals, not because of the market's preference for Bitcoin's utility (or lack thereof) which is outmatched by other cryptocurrencies. That lapse in utility is also becoming magnified in the current day. Bitcoin's reign is unlikely to be everlasting as a result, nevermind the one-true-coin believers.
Yes, which is exactly why I ask about when does market preference become a monopoly if driven by human desire to be dominant? Is it merely human intention that causes a market prefernce to evolve into a monopoly, if given enough time and lack of government oversight, or is there an example of market competition eliminating all possible monopolies from ever forming? Can you maybe elucidate how the development of Standard Oils monopoly could have been prevented without government intervention?
There are cases of monopolies that are the result of a single competitor being so efficient, cost attractive and capable of serving its market that it becomes a "natural monopoly" for whatever period it can sustain that. It's the one type of monopoly that isn't viewed dourly because it tends to represent the best possible result for both sides of the equation.
Standard Oil's monopoly, and its inability to maintain it (and why), is described by David Friedman in the Machinery of Freedom. While I can't really do the response real credit here, the simple answer is that it works quite the opposite to what you imply -- without government intervention, Standard Oil couldn't keep competition from breaking their hold. But with intervention, monopolies are more easily captured and maintained.
You can find some of Freidman's answer here (PDF, see the end of page 21 and a few beyond as well as other parts that speak to Standard Oil and more specifically to Rockefeller's unsuccessful strategies.) In all, it's an EXCELLENT read if you're really interested in how free markets topple rather than uphold monopolies and oligopolies.
Thanks for the source! I'll take a look later.
The premise is that as long as the monopoly business is not engaging in unethical business practices that it doesn't matter if they're a monopoly. All ancap ideology focuses on is barring the unjustified use of force or fraud in interpersonal relations. As long as a big company doesn't break those rules, then they can only maintain monopoly status by doing a fantastic job such that nobody sees an opportunity to compete with them or is able to successfully compete with them. That's perfectly ok in ancap world.