Maximum role of Government?

[bitplane]

You can't stock-pile a service.

Anecdote: A bus operator from a city 50 miles away tried to move into our town a few years back, the local monopoly just reduced their prices until the other operator ran out of money. A few months later the local operator sold out to a national firm for undisclosed millions, prices went up threefold and it's now cheaper to get a taxi into town if you're with two other people.

I personally don't give a shit because I can afford to get taxis everywhere, but the residents of my town are worse off overall. Proper regulation would have prevented this.

[MoonShadow]

You can't stock-pile a service.

Anecdote: A bus operator from a city 50 miles away tried to move into our town a few years back, the local monopoly just reduced their prices until the other operator ran out of money. A few months later the local operator sold out to a national firm for undisclosed millions, prices went up threefold and it's now cheaper to get a taxi into town if you're with two other people.

I personally don't give a shit because I can afford to get taxis everywhere, but the residents of my town are worse off overall. Proper regulation would have prevented this.

Maybe regulation would have prevented it, maybe not.  The key here is that the newcomer wasn't efficient enough to keep it up.  The local bus service probably had sunk costs paid for that the newcomer did not.  It's still not an example of a free market.  If www.flinc.mobi's service is not outlawed, the bus service monopoly will have to compete with everyone with a car, and if their prices don't come back down then they will go out of business also.  Avego is also developing such a service, and it won't be long before they are both ready for public consumption.  I have a beta invite to flinc, anyone want one?

EDIT: The bus service in my town is partially taxpayer supported, but is already aware of Flinc & Avego and other similar dynamic ridesharing services that are coming.  They have already started to develop their own dynamic routing system.  They have installed Internet connected GPS devices in every bus.  In addition to the regular bus routes, there will be the smaller buses (which they already have, as they are required for paratransit, a condition of taxpayer subsidies) that can be 'called' away from a general route by anyone with a smartphone and their own app.  The fees would be higher than the scheduled buses, but lower than a taxi cab.  The cab companies are just ticked, but they will be able to keep their 'monopoly' of sorts on the pick up of travelers at the airport.

[AyeYo]

You can't stock-pile a service.

Anecdote: A bus operator from a city 50 miles away tried to move into our town a few years back, the local monopoly just reduced their prices until the other operator ran out of money. A few months later the local operator sold out to a national firm for undisclosed millions, prices went up threefold and it's now cheaper to get a taxi into town if you're with two other people.

Good example.  They can't seem to comprehend the concept of barrier of entry.

[MoonShadow]

You can't stock-pile a service.

Anecdote: A bus operator from a city 50 miles away tried to move into our town a few years back, the local monopoly just reduced their prices until the other operator ran out of money. A few months later the local operator sold out to a national firm for undisclosed millions, prices went up threefold and it's now cheaper to get a taxi into town if you're with two other people.

Good example.  They can't seem to comprehend the concept of barrier of entry.

Sure we can.  But natural barriers in a free market, such as initial capital costs, are not affected by regulation.  By it's nature, regulations add barriers to market entry.  Which is why established players tend to favor some regulation of their own industry.  Subsidies lower market barriers, but at the cost to many taxpayers who may not benefit, or if they do, do not benefit to the degree that they contribute.

[AyeYo]

You can't stock-pile a service.

Anecdote: A bus operator from a city 50 miles away tried to move into our town a few years back, the local monopoly just reduced their prices until the other operator ran out of money. A few months later the local operator sold out to a national firm for undisclosed millions, prices went up threefold and it's now cheaper to get a taxi into town if you're with two other people.

Good example.  They can't seem to comprehend the concept of barrier of entry.

Sure we can.  But natural barriers in a free market, such as initial capital costs, are not affected by regulation.  By it's nature, regulations add barriers to market entry.  Which is why established players tend to favor some regulation of their own industry.  Subsidies lower market barriers, but at the cost to many taxpayers who may not benefit, or if they do, do not benefit to the degree that they contribute.

Post makes no sense.

Natural barriers to entry, such as in the bus example, preclude competition.  In an unregulated market, businesses trend toward monopolies, as one large business typically dominates an industry, then begins buying up all competition to expand business.  What is your response to this.  I don't care about strawmen about subsidies.

[Anonymous]

You can't stock-pile a service.

Anecdote: A bus operator from a city 50 miles away tried to move into our town a few years back, the local monopoly just reduced their prices until the other operator ran out of money. A few months later the local operator sold out to a national firm for undisclosed millions, prices went up threefold and it's now cheaper to get a taxi into town if you're with two other people.

Good example.  They can't seem to comprehend the concept of barrier of entry.

Sure we can.  But natural barriers in a free market, such as initial capital costs, are not affected by regulation.  By it's nature, regulations add barriers to market entry.  Which is why established players tend to favor some regulation of their own industry.  Subsidies lower market barriers, but at the cost to many taxpayers who may not benefit, or if they do, do not benefit to the degree that they contribute.

 In an unregulated market, businesses trend toward monopolies

Citation required.

[NghtRppr]

You can't stock-pile a service.

That's true but you've abandoned arguing for why goods that can be stockpiled need antitrust regulations. So, we're at least making progress since you've given up on justifying regulations for those kinds of goods now.

A bus operator from a city 50 miles away tried to move into our town a few years back, the local monopoly just reduced their prices until the other operator ran out of money. A few months later the local operator sold out to a national firm for undisclosed millions, prices went up threefold and it's now cheaper to get a taxi into town if you're with two other people.

I'm skeptical of that being a free market. I'm sure the government was involved in creating legal barriers to entry. However, services in general can be addressed the following way...

When a company operates at a certain price level and another company enters the market, it means at that price level, there was an incentive to enter the market. When a company operates at a loss, it has to recoup those losses by raising prices even higher than the old prices but that means that there's even more incentive to enter the market. You can't establish a monopoly with predatory pricing unless you've got the government backing you up.

Again, all I need to do is to show investors that a company is engaging in predatory pricing and that if we can wait out the company and be ready to go into hibernation whenever it tries to take losses, we can win through attrition.

[JA37]

Only one provider meant no cost for advertising, everybody who wanted power had to pay.

Yet again, you only focus on one thing. How was the customer service? How long did it take for outages to get fixed? How often did outages occur? How efficient was their grid? Did they support purchasing surplus power from solar panels or wind turbines? If so, what was the price per kilowatt hour? Did they have different kinds of meters, digital meters, analog meters, etc?

You see, competition doesn't just lower prices. It also raises quality and increases variety. Try to look at the big picture instead of whatever agrees with your conclusions.

But the deregulation was supposed to benefit the customers and I can't really see that a price that increased threefold is beneficial, even if they get digital meters.
The Nordic power monopoly, as it were, was a very efficient beast, and it was cheap too. Today it's a deregulated market where a few big suppliers have more or less a stranglehold on the market and they make record profits, and investments in clean energy have decreased. There are a number of scientific journals about how the deregulation didn't work as intended, if you want to read.

I'm not a big supporter of monopolies, but sometimes they work and I'm pragmatic enough to choose what "works" over what "follows my ideology" in matters like this.

[myrkul]

I'm not a big supporter of monopolies, but sometimes they work and I'm pragmatic enough to choose what "works" over what "follows my ideology" in matters like this.

I don't know the legislation surrounding the deregulation, but here in the US, what we call 'Deregulation' really amounts to granting oligopolies, or regional monopolies.

[billyjoeallen]

or just be competitive temporarily until the competition goes away.  the monopoly is established, they can afford to run at a loss for awhile.  the new competition can't, they have capital providers they need to pay back.

then after the new competition goes out of business, jack the prices back up to where they were.  repeat as needed.

You're assuming people will only look at price. Two or three cycles of this, and as soon as the next competitor shows up, everybody switches, because they know DickCorp is just going to raise the prices again if NewGuyCorp goes out of business again, which gives them incentive to keep them going.

If some megastore sells retail below your cost, just buy his entire inventory, mark it up and sell it in your store. See how long he can stay in business against you doing that.

[myrkul]

or just be competitive temporarily until the competition goes away.  the monopoly is established, they can afford to run at a loss for awhile.  the new competition can't, they have capital providers they need to pay back.

then after the new competition goes out of business, jack the prices back up to where they were.  repeat as needed.

You're assuming people will only look at price. Two or three cycles of this, and as soon as the next competitor shows up, everybody switches, because they know DickCorp is just going to raise the prices again if NewGuyCorp goes out of business again, which gives them incentive to keep them going.

If some megastore sells retail below your cost, just buy his entire inventory, mark it up and sell it in your store. See how long he can stay in business against you doing that.

Yeah, or that. Expensive in the short term, though. Especially if you don't have the shelf space.

[qbg]

or just be competitive temporarily until the competition goes away.  the monopoly is established, they can afford to run at a loss for awhile.  the new competition can't, they have capital providers they need to pay back.

then after the new competition goes out of business, jack the prices back up to where they were.  repeat as needed.

You're assuming people will only look at price. Two or three cycles of this, and as soon as the next competitor shows up, everybody switches, because they know DickCorp is just going to raise the prices again if NewGuyCorp goes out of business again, which gives them incentive to keep them going.

If some megastore sells retail below your cost, just buy his entire inventory, mark it up and sell it in your store. See how long he can stay in business against you doing that.

1) It would have to be below their price (or else you're making them money).
2) What's stopping them from not selling to you?

[JA37]

I'm not a big supporter of monopolies, but sometimes they work and I'm pragmatic enough to choose what "works" over what "follows my ideology" in matters like this.

I don't know the legislation surrounding the deregulation, but here in the US, what we call 'Deregulation' really amounts to granting oligopolies, or regional monopolies.

So no competition is better than a little competition? The market isn't "free" in your sense. It's free in the "everyone's free to compete and here are the rules" kind of way. It has turned into an oligopoly and no player is undercutting another because they make a ton of money, and no new player have emerged. I'm not sure how long anybody's supposed to wait for the market to fix problems like these, but 15 years is more than enough don't you think?

[myrkul]

So no competition is better than a little competition? The market isn't "free" in your sense. It's free in the "everyone's free to compete and here are the rules" kind of way. It has turned into an oligopoly and no player is undercutting another because they make a ton of money, and no new player have emerged. I'm not sure how long anybody's supposed to wait for the market to fix problems like these, but 15 years is more than enough don't you think?

Ahh. Yup, looks like the same thing happened in your case... they sold all their stuff to their buddies, and then set up barriers to entry. The market needs to be completely free for competition to work. If they're in a 'walled garden' of regulation, it makes it real tough for new players to enter. If no new players can enter, the existing companies can screw the customers as much as they want.

[JA37]

So no competition is better than a little competition? The market isn't "free" in your sense. It's free in the "everyone's free to compete and here are the rules" kind of way. It has turned into an oligopoly and no player is undercutting another because they make a ton of money, and no new player have emerged. I'm not sure how long anybody's supposed to wait for the market to fix problems like these, but 15 years is more than enough don't you think?

Ahh. Yup, looks like the same thing happened in your case... they sold all their stuff to their buddies, and then set up barriers to entry. The market needs to be completely free for competition to work. If they're in a 'walled garden' of regulation, it makes it real tough for new players to enter. If no new players can enter, the existing companies can screw the customers as much as they want.

So then it's better to keep a monopoly run by the state, since you have a few politicians to punish?

I'd like to know what you consider a a free market? No rules at all, or can you have a few rules in place, such as rules about waste disposal? Employee safety?  Are those the things that you claim keep competition out?

[myrkul]

So then it's better to keep a monopoly run by the state, since you have a few politicians to punish?

I'd like to know what you consider a a free market? No rules at all, or can you have a few rules in place, such as rules about waste disposal? Employee safety?  Are those the things that you claim keep competition out?

Free market: (n) A market unencumbered by regulation or taxation.

Not to say there aren't rules, but those rules are not enforced by a state, they're followed voluntarily. Ratings organizations could rate which companies do the best job in various areas.

[JA37]

Free market: (n) A market unencumbered by regulation or taxation.

Not to say there aren't rules, but those rules are not enforced by a state, they're followed voluntarily. Ratings organizations could rate which companies do the best job in various areas.

So, no rules then? If companies can't be bothered to follow rules when there's punishment waiting for those who break the laws, you expect them to follow rules they don't have to?

But what about the broken up monopoly that resulted in a oligopoly with higher prices? Surely it was better for the consumer to have a monopoly, no?

[myrkul]

So, no rules then? If companies can't be bothered to follow rules when there's punishment waiting for those who break the laws, you expect them to follow rules they don't have to?

But what about the broken up monopoly that resulted in a oligopoly with higher prices? Surely it was better for the consumer to have a monopoly, no?

You're missing the point. The point is not the compliance with the rules, the point, and the barrier to entry, is proving compliance. Licensing fees, inspection fees, all sorts of regulation-related costs. Startups often can't afford to pay these costs, which is why there's no new players. No new players means the existing ones are free to soak the customers as much as they want.

And in this specific instance, with a responsible monopoly, which got broken up into a cartel, yes, the customers were better off. A benevolent tyrant is usually better than a democracy, too, but that doesn't mean we should support tyranny.

[JA37]

You're missing the point. The point is not the compliance with the rules, the point, and the barrier to entry, is proving compliance. Licensing fees, inspection fees, all sorts of regulation-related costs. Startups often can't afford to pay these costs, which is why there's no new players. No new players means the existing ones are free to soak the customers as much as they want.

And in this specific instance, with a responsible monopoly, which got broken up into a cartel, yes, the customers were better off. A benevolent tyrant is usually better than a democracy, too, but that doesn't mean we should support tyranny.

Oh come on. You don't think Richard Branson could pay whatever fee to break into a market if he wanted to? Why doesn't he, or someone similar go in there and undercut the others? It's what should happen according to you. The real world just seems to disagree with your theory.

A government sponsored monopoly isn't comparable to tyranny. You can replace the government every four years if you want. You have power over a government.

[myrkul]

Oh come on. You don't think Richard Branson could pay whatever fee to break into a market if he wanted to? Why doesn't he, or someone similar go in there and undercut the others? It's what should happen according to you. The real world just seems to disagree with your theory.

A government sponsored monopoly isn't comparable to tyranny. You can replace the government every four years if you want. You have power over a government.

Why would Branson care? It's not his itch to scratch. Billionaires have other things to do than jump on every single profit opportunity. They go for the big fish. It's the little guys that take care of the local problems.

And yes, a government sponsored monopoly isn't only comparable to tyranny, it is tyranny. In your own words:

Only one provider meant no cost for advertising, everybody who wanted power had to pay.

And besides, you can indeed remove a tyrant. It's been done before, just takes a little work.