For example, telling factories not to work with others, otherwise they will lose profits from their main customer (a much larger capitalist).
Japan (NathanTikhonov)
Of course, nothing prevents one economic agent from negotiating various additional terms before concluding certain deals, including those that have no direct relation to the subject of the transaction. For instance, a very common type of deal is an agreement on joint household management, accompanied by a condition of exclusive sexual services, and there is no reason to believe that in the absence of a state, deals of this type would be immediately wiped out entirely.
But, as we clearly see in the example of the institution of monogamous marriage, an exclusivity clause, even when clearly stated, is observed quite sloppily, yet not every violation of this clause leads to the immediate termination of the main contract. The fact is that the contracting parties are interdependent. Even if one party to the deal is significantly stronger, to punish the second party for violating the additional terms of the agreement, they would have to incur certain costs, and this would weaken them. Moreover, the direct damage from the violation of an additional condition may be quite small, or even non-existent, while the contract itself may remain very profitable for the strong party. In other words, empty tyranny is wasteful.
Therefore, the economically stronger party, although they may puff out their cheeks and demand special attention, will find themselves forced to turn a blind eye to the fact that not every whim of theirs will be satisfied; otherwise, their habit of petty vindictiveness will quickly correct the fact that they happen, by some misunderstanding, to be the strong party in most market transactions. Thus, through excessive arrogance, once influential companies sink into insignificance.
Yeah. Here, as with discussions about socialism, it is important not to get bogged down in details. You tell a person about Venezuela, and they reply that it’s the wrong kind of socialism, and that it’s under sanctions anyway. The same goes for antitrust cases: you explain that after the forced breakup of Standard Oil, oil prices only rose, and they will cite a bunch of additional factors or simply say it was an isolated incident. You talk about the pointlessness of the Russian FAS, and they’ll say that everything in Russia is messed up, but in decent countries, it’s a different story.
It seems to me that it would be far more productive to provide a general understanding of the factors influencing a firm’s size and its operating strategy.
Let’s consider a certain company. It buys some product on the market, uses it to produce another product, and sells this new product. What the input product is doesn’t really matter. It could be raw materials, semi-finished products, human labor, technology, and so on. What the output product is also doesn’t really matter; it could even be the same product as the input, just moved to a different point in space, preserved in time, or repackaged into different containers.
A company can change in size, and this changes the efficiency of its activities (that is, income relative to investment). There are factors that lead to an increase in efficiency as a company grows larger. For example, a transportation company can afford to use higher-capacity vehicles, where the costs per unit of weight are significantly lower. And there are factors that lead to a decrease in efficiency as a company grows. For example, the expansion of a boutique chain beyond wealthy neighborhoods results in peripheral outlets bringing in less money.
As sales markets expand and progress is made in the organization of business processes, there are more and more niches in the world where large companies are most efficient. Moreover, it may turn out that a certain market simply cannot accommodate more than one or two companies, and attempting to prevent their growth or breaking up existing ones will lead to a drop in efficiency and, accordingly, a flight of capital to more profitable industries. Thus, an external regulator will only oppress the industry by increasing production costs, which may lead to price increases or savings on quality—exactly the opposite of the regulator’s goal.
At the same time, as I already detailed for the case with Microsoft specifically, even if a company dominates a certain market, under conditions of free competition, it still cannot relax and earn superprofits from monopoly rent, so nothing threatens the consumer.
At the same time, there are factors that hinder the growth of companies, so monsters formed through unsuccessful mergers and acquisitions lose efficiency and, after a while, begin to rid themselves of unnecessary parts if they do not want to go bankrupt; so here too, the presence of antitrust authorities is completely redundant.
Finally, there are state corporations for whose management the efficiency of the corporation’s operation is not important at all; what matters is the size of their personal income, which is most easily increased with substantial turnover. Therefore, state corporations will tend to expand regardless of market conditions, but this is exactly where antitrust authorities are powerless, as they are themselves precisely the same part of the state.
So, no matter how you look at it, antitrust authorities provide no benefit to either business or consumers; there is only benefit for the wallets of those who have direct influence over these bodies or access to insider information about their work.
I don’t know why the image of a fish stuck so much to this phenomenon, but now those involved in the M&A industry mock it as much as they can
Of course, other OSs exist, but Windows is much more popular than something like Debian. Moreover, as far as I know, this monopoly status is not supported by the state (quite the opposite), but arose precisely in the free software market.
анонимный вопрос
As I understand it, you are proposing to discuss Microsoft as an example of a monopoly that emerged and remains stable in a free market.
Indeed, Microsoft once created a very successful solution that significantly lowered the entry barrier for users into the world of personal computers, both due to ease of use and the fact that MS DOS was very undemanding of resources compared to the monstrous Unix. Then, a decent graphical shell was created on top of the system. Later, when software compactness became non-critical for most users, the company’s products responded in time and began to evolve toward expanding functionality and improving design. In general, skillful adherence to market incentives allowed the company to gain a good share of the desktop OS market. The accumulated network effect is such that individual failed products, like Windows Vista, are no longer capable of killing the company; a long series of bad decisions would be required for that. Nevertheless, such a thing is quite possible. For instance, Google’s browser dealt with Internet Explorer, despite its deep rooting in the system and its initially almost monopolistic position.
Of course, one could argue that the state supported Microsoft by pursuing pirates. If software monetization issues were left entirely to the producer, there would be fewer distortions. But this does not look like a factor that helps only Microsoft and not its competitors. So, in general, we can consider the market here to be free in a first approximation.
And how is this large company faring under free market conditions? It is having a hard time. In the shrinking market for PC operating systems, its share is consistently large, although far from 100%. It failed to really squeeze into the mobile OS market, where two other manufacturers dominate. Gaming consoles, augmented reality glasses, and many other products also haven’t quite taken off powerfully.
In other words, we see that all the horrors that political economy textbooks frighten us with regarding monopolies are not applicable to Microsoft: it cannot relax, hike up prices, and collect monopoly rent; it must, just like everyone else, diligently improve its products and maintain a flexible pricing policy so that even low-income clients prefer to buy Windows rather than pirate it — and yet, one by one, IT companies are surpassing it in capitalization.
This question is so common that when a memo for arguing with schoolchildren was being compiled, it was listed as number one.
Indeed, antitrust services are not needed. Monopolies are either formed where the optimal business size turns out to be comparable to the total market size, or where government regulations have created the monopoly artificially (for example, through licensing of activities, exclusive procurement from a single supplier, issuance of patents — in other words, by prohibiting anyone but the monopolist from entering the market).
In the first case, the monopolist successfully meets the demand, the market grows, and over time it turns out that there is now room for several more companies; any attempt by the monopolist to fight them using market methods leads to such a loss of profit that it becomes more profitable for the monopolist to invest in other industries rather than cling to a market share where they are still a monopolist.
In the second case, the monopolist becomes arrogant, raising prices and degrading the quality of services, while the state has to deal with consumer dissatisfaction. Sooner or later, either lobbyists for potential competitors will push through the deregulation of the industry (this is how Novatek secured the right to export liquefied natural gas, which previously belonged exclusively to Gazprom), or a black market will develop, which, without doing anything about the de jure monopoly, will undermine its de facto monopoly. Despairing of fighting the black market through state power, the monopolist will be forced to make concessions — and finally start lowering prices and improving quality.
