Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/18/84; site mit-vax.UUCP Path: utzoo!watmath!clyde!burl!ulysses!allegra!bellcore!decvax!genrad!mit-eddie!mit-vax!oaf From: oaf@mit-vax.UUCP (Oded Feingold) Newsgroups: net.politics Subject: monopolies unstable? Message-ID: <4823@mit-vax.UUCP> Date: Tue, 5-Mar-85 13:25:33 EST Article-I.D.: mit-vax.4823 Posted: Tue Mar 5 13:25:33 1985 Date-Received: Fri, 8-Mar-85 02:45:25 EST References: <2015@inmet.UUCP> Reply-To: oaf@mit-vax.UUCP (Oded Feingold) Organization: MIT, Cambridge, MA Lines: 31 Summary: Is this real life or ivory-tower st„ff? 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. Whether the stories are true is immaterial. 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. 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? 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