From: "James A. Donald" <jamesd@echeque.com>
Date: Sun, 4 Oct 1998 16:57:31 +0800
To: Jim Choate <cypherpunks@einstein.ssz.com (Cypherpunks Distributed Remailer)
Subject: RE: GPL & commercial software, the critical distinction (fwd)
In-Reply-To: <199810042051.PAA32751@einstein.ssz.com>
Message-ID: <199810042156.OAA18583@proxy3.ba.best.com>
MIME-Version: 1.0
Content-Type: text/plain



Jim Choate claims that free markets are routinely overrun by
monopolies.  I say this is nonsense.

At 03:51 PM 10/4/98 -0500, Jim Choate wrote:
> But I'd certaily entertain any evidence you may want to 
> present to your case.

How can anyone present evidence when except for Microsoft you
have not named a single company that alleged became a
monopoly, and you have been vague about the markets that
these companies allegedly monopolized, and the periods during
which these markets were monpolized.

It is as if you were claiming that giant monsters frequently
terrorized US cities.  Unless you make a specific allegation,
no refutation is possible or necessary.

For example if you were to claim that King Kong demolished
the empire state building, then someone could point out that
the empire state building still stands.

A simple explanation for your inability to name any specific
giant monsters, or any particular places and times where
these giant monsters were rampaging, is that these giant
monsters do not exist, and never have existed.

> Examples please where a small firm dukes it out (sic) on
> equal terms with a larger one...

MacDonalds vs Burger King.  Hertz vs Avis.  Mastercard vs
Visa.

And of course, the biggest mismatch of them all 

Microsoft vs Linux.

> > You mistake the political adventures of your local elite
> > for universal laws.

> What country produces shoes as a function of government
> agency and prevents private shoe production? 
>
> I must admit I nearly hurt myself laughing at this one.

Holland used to do this on the grounds that shoes were a
vital necessity, and if the market was left to private
enterprise some people would go shoeless.

> A 'natural' monoploy, to my mind, is a company that
> operates in an industry that can be saturated. By
> saturation I mean that the demand of the market can be met
> by a small number (approaching 1 if left unregulated over
> time, usualy by by-outs or business experation) of
> manufacturers.

There is no empirical evidence that any natural monopolies
exist.

> The VCR industry is a great example of a 'natural'
> monopoly. Only a few years ago *every* VCR mechanism on the
> planet was made by one of 5 companies and with the
> cessation of Curtis-Williams, not one of them was a US
> company. 

This does not make the VCR business a monopoly.  It would
only be a monopoly if the existing players were free to raise
prices.  Manifestly the market for the mechanism of the VCR
has become a commodity market, in which profit margins are
extremely low.

The same is true of the aluminium market, where you have all
aluminium smelted by a single provider.  There is nothing to
stop anyone else from going into the business, but because
the profit margins are razor thin, nobody bothers.  Although
there is only a single company, it is not a monopoly because
if they expanded their very thin proft margins by the
slightest degree, other people would promptly eat their
lunch. 

    --digsig
         James A. Donald
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-----------------------------------------------------
We have the right to defend ourselves and our property, because 
of the kind of animals that we are. True law derives from this 
right, not from the arbitrary power of the omnipotent state.


http://www.jim.com/jamesd/      James A. Donald