> In theory sure. In practice, explain the Whole Foods/Wild Oats case
Pricing power explains that. Pricing power occurs when price increases from one market player do not result in losing business to a competitor; the fact that other players could in principle choose to enter the market and unbermine that pricing power is not an argument against the existence of pricing power.
> Trader Joe's/Albertson's/etc could start carrying the goods overnight.
But, whatever one might argue they could do, they didn't in places Wild Oats or Whole Foods were alone in the segment, with price competition occurring where one of the two opened stores where the other already operated, and avoiding that price competition being documented as Whole Foods own analysis of and CEO’s motivation for the deal.
> My point is that there can be "effective competition" even if there are zero competitors at the moment
Which is false. There can be speculative, potential future competition, but that's not what anti-trust law cares about, for good reason.
The counterfactual possibility, of entrants eating excess profits, is exactly what keeps businesses from charging those excess profits! The fact that no one currently judges them to be excess profits means the existing players are not really earning monopoly profits, properly considered.
See the coal mining example from the other thread: https://news.ycombinator.com/item?id=18469312
Too the extent that's true, yes, there is no pricing power; it was not true in the case you cited, where the dynamics of price competition in local markets showed that, in fact, the speculative possibility you claim existed did not prevent Wild Oats or Whole Foods from charging monopoly rents in places where the other was not present, even though one might argue that other grocers could have chosen to sell similar products with little barrier to entry, but the entry, e.g., of WF into a Wild Oats market did result in price competition. Which internal emails showed was specifically known to Whole Foods and cited by their CEO as a reason for the buyout.
Pricing power explains perfectly the example you asked about.
It's just not a good argument, nor does it refute that this "counterfactual competition" does, normally, in practice, keep vendors from charging excess profit margins; nor does it contradict the long history of sellers entering abandoned markets thinking they'll be the only one, only to face competition shortly thereafter.
No, it doesn't, because antitrust monopolies aren't defined exclusively over an infinite future time horizon; while simple economic models often only consider that, all useful economic models and regulations consider shorter-term effects, as well, or exclusively (“In the long run, we’re all dead”, after all.)
The whole point of the network effect, is that there can be more than zero competitors who even have a superior product, and it really doesn't matter.
In fact, you can have "competition" while having all the substance of the monopoly. For example, if there are eight competitors with equal marketshare, but it's impossible for anyone new to enter the market, those eight can easily conspire to charge monopoly profits, despite each one's "small" market share.
Toy example: if everyone demands at least $30/pound for some risky kind of coal mining, because it's such a pain to do and they'd rather a) rest or b) do easier work at any lower price ... that doesn't mean coal miners are colluding or that coal mining is a monopoly.
In that case, if you want a $29/pound alternative, your desire is economically unrealistic.
If there's a single coal miner that does it for $29/pound -- and is thus the most efficient one -- that miner will dominate the (tiny, niche) market. But it would not rightly be called a "monopoly", but "a single provider who is legitimately better and would lose business if he started to falter".
Telling me that someone currently dominates a market does not prove monopoly power.
I can picture a scenario where some sites have an insurmountable advantage because of compromised network neutrality. I'm very sure that in that case, the winners would be crowing about how, "the market has spoken," when the reality is that the market is broken.
That's a distortion. It's more like, lots of people are dissatisfied, but all of the alternatives are economic/network-effect suicide. It's more like people living and working in the crappy mining town, because the only alternatives are like living as a hobo in the woods.
In theory sure. In practice, explain the Whole Foods/Wild Oats case, in which Trader Joe's/Albertson's/etc could start carrying the goods overnight.
>This directly relates to whether there is effective competition in the market—which may be slightly different than your question of whether buyers can switch to an alternative; it is more whether the alternative(s) are empirically substitutes rather than parallel non-substituting markets, whether or not buyers are able to switch.
My point is that there can be "effective competition" even if there are zero competitors at the moment; what matters is whether someone could come online and compete away the excessive profits, so you can't just look at the current competitors.
That's the point of toy example: there is zero alternative to me for SilasX-labor. You should not thereby conclude that there is "ineffective competition".