Re:Google and Facebook are monopolies. Does it matter? [audio]
by SilasX on Friday November 16, 2018 @02:18PM
(#18471207)
Yes, the monopoly argument depends on believing that somehow, even though there were these absurdly high profit margins from simply carrying a different good, no grocer other than WF or WO will ever recognize that for eternity, because, over the short time intervals that one study looked at, they never switched to carrying the goods, despite it being trivial for them to add or remove product lines for their stores, and there definitely not being monopoly power responsive for this choice further upstream.
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.
Re:Google and Facebook are monopolies. Does it matter? [audio]
by dragonwriter on Friday November 16, 2018 @08:40PM
(#18473388)
> Yes, the monopoly argument depends on believing that somehow, even though there were these absurdly high profit margins from simply carrying a different good, no grocer other than WF or WO will ever recognize that for eternity,
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.)
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.