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RE: What do we mean when we say "competition?"

  • From: David Schwartz
  • Date: Tue Nov 15 18:11:05 2005


> >> That is the exact problem with a [mon|du]opoly.  The
> >> incumbents drive
> >> the price so low (because they own the network) that
> >> it drives out an
> >> potential competition.
> >
> > So you're complaining that the problem with lack of
> > competition is that the prices are too LOW?  As a
> > consumer, I'm thrilled with low price, and would only
> > change providers for a well-defined benefit or a lower
> > price.

> Low prices of the monopoly is driving out viable competition.  Once
> competition is gone the prices WILL be raised.

	I hear this claim a lot, but it's very hard to believe. Surely raising the
prices will just bring the competition back.

	It's basically just a "damned if you do, damned if you don't". If the
prices are high, then monopoly is hurting the consumer. If prices are low,
then monopoly is hurting the competition.

> Competition brings innovation of products and services, not just
> lower prices.

	Right, except this destroys your previous point. If competitors can bring
innovation and not just low prices, then low prices shouldn't drive out
competitors.

	The flip side of the "everything is bad" argument is that everything is
good. Specifically:

	1) Low prices are good for consumers.

	2) High prices are good for competitors.

	3) Prices don't matter that much to competitors because they can bring
innovation, not just better pricing.

	DS






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