how does the free marketeers deal with monopolies?

Why are you asking irrelevant questions? We'd hope to see prices reflecting, for example, social benefits and social costs. Now try and actually offer a relevant reply to the point(s) made. I predict that you won't be able to

 

How is hope working out for you?

I gave several examples of "market concentration", the public sector. Can you give me one in the private sector?

 

You gave 'noise' and I note that my prediction is correct. You cannot dispute the use of cost-plus pricing (only possible with market power) and you cannot dispute the use of hierarchy to generate inefficient wage differentials

 

You call cost plus pricing for government services "noise" and as usual, you refuse to answer questions.

Your "prediction" is crap. In a global market many products are sold in the millions and 10's of millions. A price difference of a penny makes the difference between 80% market share and 20%. Prices keep going down, quality and performance keep going up.

 

You replied to my comment with drivel. There was no attempt to reply to the comments made. And, as I said, we would expect much different practices in government provision (given the tendency to produce merit goods)

 

At least I reply, you lamblast, pontificate, and change the subject.

You expect government practices to be different. You don't know? Why would they be different?

 

You replied to my comment with a quite random reply. There was no attempt to critique the points made. I of course also predicted your continued failure to achieve relevancy.

Government practices are obviously different. We've seen that, for example, with merit goods and how pricing policy has to take into account the positive externalities involved. That could, for example, provide a justification for a zero price in tertiary education (i.e. adopting a policy that maximises quantity demanded)

 

Yes that's pretty much what my rather uninformed opinion tells me too. But Liberalis and not amused seem to suggest that such monopolies will simply not arise in a turly free market, battle it out with them, i'll pick the winning side

In all seriousness, this is a rather good way to learn things.

 

The free market is simply the whole of all voluntary actions. Contract law, private property, and regulations can all be implemented voluntarily without the need for bureaucratic intervention.

I agree completely.

There is nothing wrong with selling a product at a lower price. This will only encourage potential competitors to innovate to either improve upon products themselves to justify a higher price or improve upon the means of producing said products allowing for cheaper prices.

As for Microsoft, they are not forcing PC sellers to do anything. For a long time consumers liked the results they were getting. There was and is no need for government bureaucrats to step in. People simply liked Microsoft better than the other competitors. Today, Microsoft is not doing as well. It is simply not as innovative as it once was. It previously had a massive share of the market, and now that share is being eaten away by competitors. This has little to do with lawsuits filed against it; it simply isn't satisfying consumers as it once was. Google and Apple are simply more desirable now.

If a monopoly is merely a company that has a very large market share, there is nothing wrong at all. The only problem is if that company is granted privileges or protected in some way by government.

 

If history is any indicator, the "market" response to monopolies was indentured servants and poor working conditions in 1905 USA. Free markets are the fantasyland vision to Libertarians as income equality is to the Communists. What has worked should be emulated (i.e. primarily components of Europe, Australia, Canada and the USA). True free marketeers don't deal with monopolies, they benefit from them.

 

Enforcement of contract law and private property rights requires an impartial party, that is the govt. Asking companies to police themselves is like asking the govt to police itself, it is pointless and toothless.

Microsoft is a great example of a company dominating a market and using its position to squash competition. For example, MS required PC sellers to bundle Explorer and Media Player with Windows as a way to counter other vendors software (such as RealPlayer, QuickTime, FireFox). Vendors that did not bundle would be denied Windows or required to pay higher price for Windows, which with Windows holding +90% market share could put that PC seller out of business. MS has a reputation of buying small innovative companies that threaten Windows (MS's cash cow) and killing the product if it cannot be integrated into Windows.
http://en.wikipedia.org/wiki/Microsoft_litigation
http://www.webmasterworld.com/microsoft_windows_os/3003863.htm


On another note, PC consumers didn't like Windows (maybe you remember the infamous blue screen of death?), they just didn't have any options. Windows never worked very well until XP.

 

linux?

 

linux is not a mass market product despite offshoots like RedHat. linux requires some knowledge and ability with operating systems, it doesn't install easily on all computers. There are advantages to linux, but its a niche market product.

 

But it is and has been an alternative to windows. As has x86 Solaris or even the Mac OS if you want it badly enough. (yes it can be installed on a PC) These competitors didn't take market share because Microsoft offered a reasonable good, easy to use, easy to obtain and inexpensive product. If they used their market share to drive up prices, they would see their market share start dropping and other companies would start offering alternatives.

Just look at MS Office. It also used to be a near monopoly. It is a decent product, but it is so expensive that Open Office - a slightly lower quality, but perfectly adequate and free alternative - has already taken about a fifth of the market share.

 

Very well said.....

 

Another basic error! We cannot understand markets without reference to exchange and conflict/coercion. The right wingers peddling 'free market economics', for example, are ultimately supporters of magnifying coercion (through more market power and greater labour exploitation)

Tut tut. Hayekian information problems inform us that, only in the most simplistic hierarchies, will the 'dispersed knowledge' problems associated with economic planning be avoided. So how do these firms survive? They survive by using hierarchies to minimise transaction costs associated with the market. And those hierarchies necessarily lead to coercive relations (such as using discriminatory practices to magnify economic rents from underpayment).

 

The government is not impartial. The government is entirely political, serving the interest groups with the biggest wallets. Can you tell me what rationale you have for calling the government impartial? A third party of some sort can provide all of the services you need without being the government. It is easy to assume such services would not exist because government holds an monopoly on such services, prohibiting competition. Furthermore, asking companies to police themselves was never the argument made, thus your comparison is irrelevant.

You mean offered a product consumers preferred more than everything else that was being offered by other companies. Asking the government to break up Microsoft is not impartial, it is the opposite--bias against Microsoft in favor of competitors that do not offer products consumers like as much. Competitors lobby government to stop Microsoft rather than innovate on their own.

And there is nothing wrong with any of that. Windows was incredibly popular. Again, as I already said before, Microsoft did not force the PC vendors to do anything. The PC vendors could easily have said no, but Microsoft simply had the best Operating System at the time. Bringing Firefox into it makes little sense, for Firefox was started in 2003. Much of this discussion about Microsoft has been regarding the 90s, when it was at its peak. Firefox is actually a great example of a competitor eating away at Microsoft. How many people actual use IE nowadays? Competitors simply offer their browsers free online. Microsoft can't stop that.

How do you know how innovative the companies are? If the companies are successful and innovative, there will be a large profit potential in them. It would make more sense for Microsoft to buy out the companies and continue their operations, similar to facebook's purchase of instagram. If Windows was so popular, and microsoft was trying to implement the company's success into windows and such an implementation failed, I don't see how anything wrong has occurred--in fact, Microsoft loses money from the buy out.

PC consumers did like windows, compared to the other options. Today windows is not as popular, but in the 90s it was much more so. The blue screen of death is the result of new technology that has not been perfected. Complaining about that is like complaining about having to wind up cars to start engines when they were first invented. Nobody liked that either, did they?

Companies compete on the market. Sometimes companies for a time are so successful that they have very large market shares. But never is such a "monopoly" a bad thing. It only becomes a drain when government grants the company special protections that artificially sustain its position in the market. Patents are government granted monopolies, barriers to entry for competition. They have become absurd in their descriptions, as is clear with the trolling going on between Apple and Samsung. If you dislike monopolies, I would look into monopolies created and sustained by government force first.

 

The worst monopolies are government sactioned ones.

I tend to believe that most types of monopolies can never be very long sustained; there will always be an outside competitor that will form to take advantage of the high price. But certain monoplies, like on rare metal ores or expensive real estate in a limited land area, can be quite problematic.

In other words, I am worried about corporations gaining monopolies on natural resources, but not on production or services.

 

Why would there be no outside competitor in the case of natural resources? Why would you throw everything you just said about every other industry out the window?

 

A monopoly is when the state grants one entity (often itself) the privilege to own an entire industry, aggressing upon all those who peacefully attempt to compete. Monopolies cannot exist in a free market by definition.

 

You are thinking as if there is a free and open market with robust competition in which companies bring their products to market and the consumer decides what is best. Microsoft has done a good job using its position to either squash competitors before their alternative makes it to the market, or MS makes it impossible for the competitor to compete. Thats why there are so many court cases against MS in the US and EU.

MS has done a good job keeping the alternatives to Windows out of the competition.

linux is an alternative, but it is not a mass market product. linux is not for the avg PC user, it does not install seamlessly on every computer, it does not always integrate with peripherals in anything near a plug & play manner.

MS will eventually lose its dominant position (as you indicate it is losing with MS Office), but it will take many years, and in the meantime MS is preventing progress.

 

Our current govt is not impartial. Govt is supposed to be impartial, that is how it was intended in the Constitution.

Consumers don't have a real choice with PCs. Try to buy a PC without Windows. Almost all come with Windows pre-installed, if you want something other than Windows you still have to buy the PC with Windows (and you pay for that), then buy your alternative OS, install your OS, and then install all the other software.

If you are a computer nerd you can go with linux or some other OS, but the avg consumer doesnt have a choice. Thats not because Windows is such a great OS, in fact it was never even a reasonably good (or even working) OS until XP.

The entire point is that it is not a free market. As mentioned, companies have not been able to bring their product to market and let consumers select the winner. MS uses its position to stop the competitors before they get to the market, and if they get to the market MS undercuts them because MS can suffer a short term loss in one area while the competitor cannot.

All you have to do is google the subjec tto see all the lawsuits and chicanery going on with MS. Go read my earlier links as a starting point.

 

We know that isn't true. First, a free market cannot exist in capitalism. Second, we know that the boundaries of the firm (both horizontal and vertical integration) will lead to market concentration and hence monopoly power. Those arguing otherwise are myth-makers

 

Genuine free marketeers are primarily from the upper and upper middle classes, so they actually don't give a crap about monopolies - it goes with their interests to promote monopolies which is the main reason they support the "free market" ideology.
Then there's people who promote a free market even though it's against their interests as a member of the low, lower middle or centre middle classes. Usually this is from the pervasive propaganda by the capitalist media claiming that the "free market" is good for everyone. The truth is that there's nothing free about the free market!

 

Did you bother to read my explanation or are you purposefully being dishonest by editing it out?