Re:WeWork and Counterfeit Capitalism
by WalterBright on Wednesday September 25, 2019 @04:01PM
(#21074692)
> No, because they won't be able to raise enough capital to cover startup costs when investors know that the dominant player can just price dump long enough to starve any new company out.
For the larger company to do that, their losses would be correspondingly larger. This is why it's pretty hard to find a case history of this strategy being successful.
> "Market" isn't magic fairy dust that spontaneously causes efficiency to appear from nowhere.
Neither is regulation. While it is true that "market failures" (imperfect markets) are common, it does not follow that regulation will improve them. In fact regulation usually makes things worse due to a combination of imperfect information (the regulators can't find out what they need to know to regulate efficiently) and regulatory capture (the regulators end up acting in the interests of the regulated industry instead of the consumers).
No, because they won't be able to raise enough capital to cover startup costs when investors know that the dominant player can just price dump long enough to starve any new company out.
Relatively unregulated capitalism works OK when the product area naturally approaches a perfect market:
- Simple easily compared products - Consumers have easy access to accurate product information - Low startup cost for producers to enter the market - No costs for consumers to switch to a different producer
Very few markets actually resemble that. In order to keep non-perfect markets functioning efficiently, it takes a lot of strong, enforced regulation.
This is increasingly true as we transition to the Information Age where products are increasingly data and services. For those, network effects are powerful, which further entrench the dominant player.
> I'd assume the market would just corrects itself later?
How? "Market" isn't magic fairy dust that spontaneously causes efficiency to appear from nowhere.