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  1. #11
    Senior Member tkae.'s Avatar
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    Quote Originally Posted by Little_Sticks View Post
    Right, but they don't do it to raise prices and hurt the consumer, but instead they lower them, in effect giving the consumer more buying power with their money and Amazon makes a meager profit. Where's the problem? Is this more a fear that if Amazon becomes a monopoly that they will make prices higher than what they should be? Granted, if they do that, the businesses they put out of business would theoretically be able to compete again, so I'm not sure where the fear/problem is.
    Depends on what economic model you're looking at, but I can't think of one where a monopoly is a good thing.

    I prefer the Austrian School, and the problem with a monopoly is that in the short term it's okay but in the long term it stagnates the industry by chasing out the competition. If there's no competition, then sure, things are fine now, but in the long run it wont' be so great and the quality of the service will decay and the prices will drift upward. They won't have a reason to care, so they won't care. Look at Comcast.

    Another example you'll be very painfully aware of is oil. Why are gas prices low? Because OPEC (a thug group of oil-producing countries like Saudi Arabia and Venezuela) are flooding the market with cheap oil to try and put Russian oil and American fracking companies out of business. OPEC has the long-term income because of their oil reserves and because of how much money they have in the bank to take a massive blow of billions or trillions of dollars, and in return they completely destroy their competition who, like most normal companies, can't lose billions or trillions of dollars for any realistic period of time. Like a day. Or an hour. American fracking companies are still fledgeling and haven't been operating long enough to be in that position, and so far have had massive layoffs from the cheap gas. And then Russia is imploding, 'nuff said about that. If they put those out of business, they'll have the market cornered for another decade, and will make back an exponential amount of money they lost by slashing their prices right now. They did the exact same thing back in the 1980s, and it's how they came to be as powerful as they are now. What did they do when they had the monopoly? Controlled the prices. And it was okay at first. But it wasn't so okay for the past decade when oil was $4 a gallon, was it? It'll be even worse after this round of cheap gas if they get more market share from their plan.

    So monopolies aren't good. They might not be bad for you right now at this exact moment, but they will be. Amazon, for example, is putting an extreme amount of pressure on the publishers they work with, and are costing them a lot of money. And it will hurt the publishing industry, and therefor the literature being published. They've outright cut the publishing companies off at the knees more than a few times when they tried to get control of their digital prices back.

    In Austrian School economics, though, a monopoly isn't a naturally-existing entity. They only come about by government regulation because in a true free market the competition would prevent any one company from actually gaining that much power. Obvious examples are Standard Oil (Rockefeller), U.S. Steel (J.P. Morgan), and Western Union, where the government outright gave them the exclusive right to the business. And you know those names to this day. Less obvious examples of how government regulation of the market can create cancerous companies that feed off of the economic imbalance are Halliburton, Wal-Mart (primarily because of how it exploits a lack of workforce laws to drive cheap goods with third world labor), and Apple/Microsoft.

    I listed both of those because they do the exact same thing via patent laws. The tech industry is bloodier than a gladiatorial arena right now.

    Basically, a monopoly comes into being because America doesn't have a truly free market. We talk about it, but at the end of the day we're too pussy to actually do it. And so we have just enough regulation to cause ourselves marketplace problems, but not enough regulation to actually address the problems to protect the consumer or the health of the market. I'm not for market regulation, but if you're gonna do it then you have to do it right.
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  2. #12
    Senior Member Little_Sticks's Avatar
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    Quote Originally Posted by tkae. View Post
    Depends on what economic model you're looking at, but I can't think of one where a monopoly is a good thing.

    I prefer the Austrian School, and the problem with a monopoly is that in the short term it's okay but in the long term it stagnates the industry by chasing out the competition. If there's no competition, then sure, things are fine now, but in the long run it wont' be so great and the quality of the service will decay and the prices will drift upward. They won't have a reason to care, so they won't care. Look at Comcast.
    I've noticed that with almost all the internet service providers. And I see your point, but Amazon's business is centered on shipping. Brick and mortar stores usually have higher costs because it provides convenience for the consumer. You can wait a while and get something for cheaper or get it in a brick and mortar store right now, so Amazon never really controls the market; if Amazon made it so that its prices were too high and they stopped providing quality service, people could immediately buy from brick and mortar stores, without waiting for online business to resurface in competition.

    Another example you'll be very painfully aware of is oil. Why are gas prices low? Because OPEC (a thug group of oil-producing countries like Saudi Arabia and Venezuela) are flooding the market with cheap oil to try and put Russian oil and American fracking companies out of business. OPEC has the long-term income because of their oil reserves and because of how much money they have in the bank to take a massive blow of billions or trillions of dollars, and in return they completely destroy their competition who, like most normal companies, can't lose billions or trillions of dollars for any realistic period of time. Like a day. Or an hour. American fracking companies are still fledgeling and haven't been operating long enough to be in that position, and so far have had massive layoffs from the cheap gas. And then Russia is imploding, 'nuff said about that. If they put those out of business, they'll have the market cornered for another decade, and will make back an exponential amount of money they lost by slashing their prices right now. They did the exact same thing back in the 1980s, and it's how they came to be as powerful as they are now. What did they do when they had the monopoly? Controlled the prices. And it was okay at first. But it wasn't so okay for the past decade when oil was $4 a gallon, was it? It'll be even worse after this round of cheap gas if they get more market share from their plan.
    Oh, I'm aware of this. I'm banking on it. But this situation is a bit different than Amazon because there are brick and mortar alternatives to Amazon. Oil doesn't have a whole lot of alternatives.

    So monopolies aren't good. They might not be bad for you right now at this exact moment, but they will be. Amazon, for example, is putting an extreme amount of pressure on the publishers they work with, and are costing them a lot of money. And it will hurt the publishing industry, and therefor the literature being published. They've outright cut the publishing companies off at the knees more than a few times when they tried to get control of their digital prices back.
    Well, while it is true that the pressure they put on the publishers can have a stagnating effect, it should help authors become more competitive by lowering prices and allowing for easy publication of new authors; there have been new authors that have made millions selling on Amazon digitally, whereas none of the standard publishers would publish their work; and with lower prices people will be more likely to buy books, instead of other things. I can understand the publishers being agitated that someone is trying to dictate prices for them, but they don't have to sell their stuff with Amazon either. It reminds me of the music war that the music industry used to have with downloadable music; they could fight it or adapt to what's current and find other ways to make money, such as with putting music on youtube and selling adspace and increasing the profitability of concerts. But then you've also got things like Pandora that reduce the costs for independent artists to get recognized and also make money at their profession by cutting out the publishers. Of course, publishers don't like competition and low prices because it means they become unnecessary - their services no longer become worth the cost. But the point is, as the saying often goes "there's two sides to every story" and Amazon definitely has theirs as well.

    Basically, a monopoly comes into being because America doesn't have a truly free market. We talk about it, but at the end of the day we're too pussy to actually do it. And so we have just enough regulation to cause ourselves marketplace problems, but not enough regulation to actually address the problems to protect the consumer or the health of the market. I'm not for market regulation, but if you're gonna do it then you have to do it right.
    Not meaning to sound insulting, but this doesn't make any sense. Free markets are exactly what allow monopolies to sell products at a loss to drive others out of business. It's exactly government regulation that stops it from happening. So not sure what you mean?

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