What do we mean when we say "competition?"

Thu Nov 17 04:39:32 UTC 2005

--- JC Dill <lists05 at equinephotoart.com> wrote:

> 
> David Barak wrote:
> > 
> > --- Owen DeLong <owen at delong.com> wrote:
> > 
> >> Is that still true if the "adequate" service is
> >> being provided at a price which is two to three
> >> times what it should be costing and the provider
> is
> >> enjoying the ability to do this because nobody  
> >> else is in the market space?
> > 
> > I'm confused.  Earlier in this thread you were
> arguing
> > that the current providers were keeping priced
> > artificially LOW.
> 
> They are keeping prices artificially low now, to
> drive out the 
> competition.  They will raise prices once they have
> no competition, as 
> monopoly companies always have done in the past.
> 
> Standard free market behavior is for a large company
> to cut prices (when 
> they can, when they have income from some other
> source to afford this 
> tactic) to drive the competition out of business. 
> Then once they have a 
> monopoly to raise prices (and thus profits).  Check
> out the price for 
> Microsoft software over the years.  As their
> products each became a de 
> facto monopoly in their market the prices went WAY
> up.  

Windows 98 price (in 1997) -> $209
Office 97 Standard (in 1997) -> $689 
Windows XP price (now) -> $199.
Office 2003 (now) -> $399.

Want to try that again?

The problems most people have with microsoft's
monopoly status have nothing whatsoever to do with the
price of the software which forms the basis of their
monopoly (windows + office), but rather their
willingness to use the profits from them to subsidize
other losing ventures to drive out other competitors.

The argument regarding ILECs is reversed.  I
appreciate the citation of Standard Oil, but it is a
fallacy to think that there is a one-to-one mapping
between SO and any/all of the ILECs.  

Assertions that "monopolies do X and they're bad, and
we know that Y will eventually do bad because they're
a monopoly" are circular.

David Barak
Need Geek Rock?  Try The Franchise: 
http://www.listentothefranchise.com

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