Throughout history there are very few monopolies and they don't normally last that long; that is unless they get are granted special privileges by the government.
Concentration is the default in an unregulated environment. Sure pure monopolies with 100% market control are rare but concentration is rampant. A handful of companies dominating tech, airlines, banks, media.
Concentration seems much more prevalent in heavily regulated markets e.g. utilities / airlines. In many cases regulators have even encouraged this e.g.finance.
There is no default for unregulated markets. It's a question of whether the economies of scale outweigh the added costs from the complexity that scale requires. It costs close to 100x as much to build 100 houses, run 100 restaurants, or operate 100 trucks as it does to do 1. That's why these industries are not very concentrated. Whereas it costs nowhere close to 100x for a software or financial services company to serve 100x thee customers, so software and finance are very concentrated.
The effect of regulation is typically to increase concentration because the cost of compliance actually tends to scale very well. So businesses that grow face an decreasing regulatory compliance cost as a percent of revenue.
Concentration is not monopoly, and furthermore your comment does not begin to address the critical part of parent’s comment : “does not last very long”
Inequality at a point in time , and over time , is not nearly as bad if the winners keep rotating
> unless they get are granted special privileges by the government
That's what all the lobbyists are for.
None of the people or organisations that advocate for "free markets" or competition actually want free markets and competition. It's a smoke screen so they can keep buying politicians to get their special privileges.
They always inevitably end up being given special privileges.
Because, contrary to what we would all like to believe, once a company becomes large we don't want them to go under, even if they're not optimal.
There's a huge amount of jobs, institutional knowledge, processes, capital, etc in these big monopolies. Like if Boeing just went under today, how long would it take for another company to re-figure out how to make airplanes? I mean, take a look at NASA. We went to the moon, but can we do it again? It would be very difficult. Because so many engineers retired and IP was allowed to just... rot.
It's a balancing act. Obviously we want to keep the market as free as possible and yadda yadda invisible hand. But we also have national security to consider, and practicality.
mondrian|9 months ago
fallingknife|9 months ago
There is no default for unregulated markets. It's a question of whether the economies of scale outweigh the added costs from the complexity that scale requires. It costs close to 100x as much to build 100 houses, run 100 restaurants, or operate 100 trucks as it does to do 1. That's why these industries are not very concentrated. Whereas it costs nowhere close to 100x for a software or financial services company to serve 100x thee customers, so software and finance are very concentrated.
The effect of regulation is typically to increase concentration because the cost of compliance actually tends to scale very well. So businesses that grow face an decreasing regulatory compliance cost as a percent of revenue.
hammock|9 months ago
Inequality at a point in time , and over time , is not nearly as bad if the winners keep rotating
danielmarkbruce|9 months ago
phatfish|9 months ago
That's what all the lobbyists are for.
None of the people or organisations that advocate for "free markets" or competition actually want free markets and competition. It's a smoke screen so they can keep buying politicians to get their special privileges.
const_cast|9 months ago
Because, contrary to what we would all like to believe, once a company becomes large we don't want them to go under, even if they're not optimal.
There's a huge amount of jobs, institutional knowledge, processes, capital, etc in these big monopolies. Like if Boeing just went under today, how long would it take for another company to re-figure out how to make airplanes? I mean, take a look at NASA. We went to the moon, but can we do it again? It would be very difficult. Because so many engineers retired and IP was allowed to just... rot.
It's a balancing act. Obviously we want to keep the market as free as possible and yadda yadda invisible hand. But we also have national security to consider, and practicality.
cyberax|9 months ago
That's completely incorrect. Historically, monopolies were pretty long-lived. So much that they were often written into the legal codes.
It's only fairly recently that the pace of innovation picked up so much, that monopolies not really die per se, but just become irrelevant.
unknown|9 months ago
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