From: Petro <petro@playboy.com>
Date: Fri, 9 Oct 1998 06:52:54 +0800
To: cypherpunks@cyberpass.net
Subject: RE: GPL & commercial software, the critical distinction (fwd)
In-Reply-To: <33CCFE438B9DD01192E800A024C84A193A7A28@mossbay.chaffeyhomes.com>
Message-ID: <v04011708b242c4aaec52@[206.189.103.230]>
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At 6:28 PM -0500 10/6/98, Matthew James Gering wrote:
>Jim Choate wrote:
>> > The only problem is your statement that one can dominate
>> > "saturable" markets without some artificial "mechanism."
>> Who said anything about 'artificial'?
>I did. I state you cannot have a coercive monopoly without artificial
>barriers (and hence a free market cannot have a coercive monopoly) and
>you disagree. I am not sticking any terms where they don't go, you have
>consistently theorized monopolies can exist in a free market.

	He is right--to an extent. Monopolies _can_ exist in a free market
under 2 conditions:

	1) Early stages of a market, when the creator/initial entrant has a
lead on the competition. This will (without "government" intervention) end
at some point unless:

	B) a competitor emerges that manages to meet the entire markets
desires for goods and services in such a way that profits are so thin as to
not attract competion.

	(1) can be effectively ignored, it is a localized (in time)
condition that the market will usually remedy. It is (b) where the
questions come in.

	I have maintained that Monopolies in ANY market large enough to
accept competition (i.e. larger than one or two purchasers) cannot continue
to exist (in fact would have a hard time coming into existence) without
some sort of government influence. Jim maintains that this is not only
possible, but happens UNLESS the government steps in. Of course Jim has in
the cotext of this discussion defined monopoly as a number of
producers/distributers greater than 2 which are acting in alleged collusion
for certain lengths of time. This ignores the fact that like in _any_
system one must account for a certain latency in a market for corrections
to take place. It also ignores the fact that no two (especially not 5 or 6)
people can agree on anything for long. Look at OPEC, they have a "monopoly"
of sorts (for very loose definitions of monopoly), and they can't seem to
stay in agreement for more than a couple months.

>Perhaps you should re-read my statement and not assume negatives where I
>clearly did not write them.
>
>> talking a free-market, there are *only* two participants;
>
>That is a twisted and absolutely unjustified definition of a free
>market. A free market lacks forceful restriction or prohibition of free
>[consensual] trade.

	In a free market, having only 2 participants should be the
definition of a monopoly. Any more than that, and the monopoly would start
to degrade.

>EXCEPT that which violates individual rights. I will argue that an
>anarcho-capitalist market that treats force as a commodity is NOT a free
>market.

	Why not?

	As long as force is susuptible (mind went blank, can't spell it) to
capital, and can be bought and sold, then it becomes a part of the equation
just like an extremely efficient manufacturing process, the availablity of
cheap energy, or a lazy, bloated competitor.

>> > You will find that that is not possible without an
>> > artificial barrier to competition.
>>
>> Demonstrate please. The problem with this view is that it
>> implies that given sufficient time *any* market strategy
>> will fail. In other words there is no best or efficient
>> strategy for a given market.
>
>There is but ONE market strategy: to price at a point lower than new
>entrants could sustain their business, and constantly increase
>productive efficiency and reduce costs.

	No, there isn't. Sometimes you can put your price point higher than
the competition would necessarily come in with, and trade off reputation
capitol for the extra.

	Look at the atheltic shoe market, you have Nike, Rebok, and a
couple others. No, let's say I have a shoe that is demonstratably better
(by any margin) than the best shoe out there. I even have a marketing
funding to compete with Nike. Will I be able to out price them? No. Even if
I had a manufacturing process that let me produce a shoe that competeted
with Nikes $150 shoes for about .50c, I couldn't price them at that level.
I _could_ price them about $50, and grow.

	This is a bad example because there are a lot more variables in the
shoe market than in something very simple like electricity, or water.

>This works great in the short term, especially in emerging industries,
>but it is statistically improbable for a company to maintain perfection.
>The market is not static, it is always changing and technology often
>favors new entrants who are not encumbered with legacy technology.

	Then there isn't "one market strategy", strategies must change and
develop with times and products. There would be different strategies for
different products, and at different points in a products life cycle.

>It is less relevant that such a company is unlikely to maintain that
>position forever, but that such efficient dominance is good for the
>market. Productive efficiency raises the standard of living.

	Alcoa. So good no one felt the need to compete. A monopoly that
wasn't a problem.
--
"To sum up: The entire structure of antitrust statutes in this country is a
jumble of economic irrationality and ignorance. It is a product: (a) of a
gross misinterpretation of history, and (b) of rather nave, and certainly
unrealistic, economic theories." Alan Greenspan, "Anti-trust"
http://www.ecosystems.net/mgering/antitrust.html

Petro::E-Commerce Adminstrator::Playboy Ent.
Inc.::petro@playboy.com::petro@bounty.org