People keep mentioning cable companies as monopolies. Sure, most houses are serviced by only one cable company. But DirecTV and Dish are direct replacements for a huge percentage of those houses, and is available in places cable isn’t. Now we have Netflix, Amazon, Hulu and a plethora of smaller services, all fighting for the same dollars. So capitalism is alive and well in that arena. Alternate services are being created, to take on the cable industry that was taking advantage of it’s monopoly.
So tacitly conceding that there was a monopoly in some areas.
But even if we thought that the market eventually breaks up monopolies, why must society sit back and wait for that to happen? Bear in mind some industries’ market domination looks pretty stable after decades with little evidence of new entrants in the market.
Monopolies are almost impossible to maintain without government enforcement. The more they exploit the market the more incentive there is for someone to undercut them.
Yeah…but really big monopolies can withstand being undercut, and can fight right back by undercutting the would-be competitors. They can afford to lose money that way a lot longer than their smaller, more enterprising competitors can.
It doesn’t take government enforcement; it just takes really deep pockets.
Also the barriers to entry are already very high in many industries.
If you wanted to start a rival company to my current employer I reckon you’d need to find around at least $50 million and be prepared to wait 12-15 years to make a competing device / service and get it through regulation and licensing before you can start generating revenue (btw this is the medical industry we’re talking about so the regulation is not spurious).
None of that makes it impossible of course; it might look like a nice investment for some person or group with a lot of surplus cash to invest. And maybe a company can start with making other products and services before gradually moving into our field.
I’m just saying it’s not as simple as the market immediately rushing to fill demand.
My company makes great profits and there hasn’t exactly been a flood of competitors trying to enter the market.
ETA: I’m not saying that high barriers to entry = monopoly. Or that the government should do something about my employer :eek:
I’m just saying with how high the barriers are in some industries, it can be relatively easy for an unscrupulous company to once in a while thump down a rare company that manages to make it over the hurdles.
What about railroads? The first rail-line built might be hugely profitable, but think of the cost to build a competing line where traffic didn’t warrant it.
Consider the brand-name recognition and marketing networks of PepsiCo and CocaCola. Even 7Up is a PepsiCo product outside the U.S. Or do you claim that duopolies don’t “kill competition” as monopolies do?
According to this article in Forbes magazine, this is not the case.
I can’t read the article; “Adblock detected.”
Anyway, I was quoting what I was taught in an Econ 101 class, a damn long time ago. At least one professor of Economics believed it to be true.
Short version: the higher wages didn’t let workers buy cars and actually saved Ford money because it reduced the huge turnover in the assembly line plants. No question it has been passed on as a story about Ford’s vision but it may not be true.
Ford definitely played up the “I pay my workers enough to by my cars” story later on, because it made him look good. One should bear in mind that if Henry Ford told the truth it was merely a coincidence; it’s complete nonsense.
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There is no contemporary account that Ford elected to pay his workers more so they could buy Ford cars. There is mounds of evidence that he paid his workers more because turnover was very high, and high turnover is bad for a manufacturer.
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If Henry Ford ever demonstrated a willingness to pay people extra money out of the goodness of his heart, it is not very easy to find.
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At the risk of pointing out the obvious, paying your own employees more so they can buy the products they make is silly and makes no business sense. Paying your employees more so they can buy your products is going to cost you money; there is no way around it, and of course anyone back then knew that, they knew how to do math. It would have struck people in 1908 as being just as insane as it strikes people today. You cannot make money selling products to your own employees, and if every single employee of Ford had bought some other car it would have made little difference.
You lost me at this part of the explanation.
If people are suggesting Ford paid his employees more out of generosity, or to just have happy workers, then very obviously that’s going to cost more money.
Do you mean it’s less cost-effective than just giving them a substantial discount on buying a car, but paying them a low salary, say? This would make sense but you neglected to say this.