From: Jim Choate <ravage@ssz.com>
Date: Fri, 6 Feb 1998 12:12:57 +0800
To: cypherpunks@ssz.com (Cypherpunks Distributed Remailer)
Subject: Free-market monopolization features...
Message-ID: <199802060335.VAA04271@einstein.ssz.com>
MIME-Version: 1.0
Content-Type: text



Hi,

This is the theory in its current working version:

An unregulated (free-market) economy will inherently monopolize when, but
not necessarily only if, the following are present:

 -  the market is saturated, in other words the number of consumers at
    any given time are equal to or less than the service providers ability
    to provide that service (or resource). This means the long-term survival
    of firms is a function of retained market share and raw resource share
    control/ownership.

 -  the technology and/or start-up costs are high in material and
    intellectual factors. This minimizes the potential for new providers
    to start up. Providers will also require non-disclosure and other
    mechanisms to reduce sharing of information and cross-communications
    except under controlled conditions. Expect an increase in certifications
    and implimentation standards required to do business with the more
    succesful of these providers.

 -  an individual or small group of service providers have a small but
    distinct efficiency advantage in technology, manufacturing, or
    marketing. Over a long-enough time this market advantage will grow
    and as a result widen the 'technology gap' between firms.

 -  expect the most efficient firms to share their profit with the
    critical intellectual contributors. This further reduces the
    problem of cross-communication and new provider start-up.

 -  expect to see the more successful providers to join in co-ops with
    the less succesful providers. This will be under the surreptitous
    goal of 'developing technology'. It's actual goal will be to cause
    these smaller firms to commit resources to such enterprises. As soon
    as it is strategicaly advantagous the primary providers will break-off
    the co-op. This has the effect of further reducing the ability of the
    smaller providers to react in a timely manner to market changes or
    develop new technology due to resource starvation.

 -  expect to see the less efficient providers to combine in an effort
    to reap the benefits of shared market share and resources. Unless
    this partnering provides a more efficient model and there is sufficient
    time for that efficiency to develop these new providers will eventualy
    fail or be joined with other providers.

 -  expect to see the primary provider buy those less efficient providers
    that don't fail completely. These purchases will be as a result of
    some new or unexpected technology that will significantly increase
    the market share of the primary provider -or- it will be with the
    goal of eliminating this secondary technology and forcing those
    market shares to do without or use the primary providers technology.



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