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From: cliff@unmvax.UUCP
Newsgroups: net.politics
Subject: Re: monopolies unstable?
Message-ID: <723@unmvax.UUCP>
Date: Wed, 6-Mar-85 17:59:15 EST
Article-I.D.: unmvax.723
Posted: Wed Mar  6 17:59:15 1985
Date-Received: Sat, 9-Mar-85 19:44:12 EST
References: <2015@inmet.UUCP> <4823@mit-vax.UUCP>
Organization: Univ. of New Mexico, Albuquerque
Lines: 54

> Context:  nrh@inmet attributing to dmck
>     >As it happens, I do believe that monopolies are not stable unless
>     >given special, generally government-based protection.  As Daniel McK.
>     >points out, such monopolies leave themselves open to "cracking"
>     >if they charge rates over their marginal costs -- if, in other words,
>     >they get greedy.  
> Forgive my naivete, but it strikes me that monopolies can get nice and
> greedy and not be destabilized.  I recall stories of Standard Oil driving
> out competition by giving it away free until the competitor dropped dead,
> then raising prices.  Also of Bell Telephone doing the same.

I remember stories about a man in a Red suit that could produce sufficient
toys to give at least one to each child of the world once a year.  Couldn't
we find him and use his technology to solve world crisis?

> Whether the stories are true is immaterial.

Same here...let's divert precious resources to looking for the Red suited
man.

> The point is that when
> analyzing at anything but the surface level, monopolists/oligopolists
> can easily distort a "free market" to their liking.  They have economies
> of scale, they can survive a drought (like giving it away for free), 
> they can integrate vertically and horizontally, hence squeezing others
> out of starting up, etc.

As long as a monopoly is giving its product away for free there is no
problem.  At the precise time the monopoly raises its price above what
it would cost someone else to produce the same product, the monopoly
is susceptible to "cracking."  While it is charging below the cost that
someone else would incur in production, the cost is reasonable.

> What am I missing, gentle readers?  The flamacious economic discussions
> here seem based on sand, living as they do on assumptions of hypothetical
> societies and systems.  Is this really where it's at?

Talk about weasel logic.  First you condemn the claims by saying you have
heard stories (which are false as presented--Standard Oil has been brought
up *many* times) and then say whether or not they are true is immaterial.
*Then* you claim that the economic discussions are based on hypothetical
societies and systems.

> Cheers,
> 
> Oded Feingold			UUCP:	mitvax!oaf
> MIT AI Lab			Arpa:	oaf%oz@mit-mc.ARPA
> 545 Tech Sq.			AT&T:	617-253-8598
> Cambridge, Mass. 02139

	--Cliff [Matthews]
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