15 ms·

This is an interesting angle. Are there examples of it actually happening?

by karzeem 10y ago

patrickaljord 10y ago
There are no examples. Social/price dumping is the big boogie man here in Europe used to regulate, tax, sue or just plain forbid foreign companies from competing aggressively against local companies. Branding the permanent menace of social/price dumping is just cronyism and protectionism in disguise, it hurts customers, innovation and employment. I hate it when populists and even regular politicians uses it and I hate it even more when people buy it, really makes me cringe but there's nothing I can do I guess.
- dragontamer 10y ago
  I dunno about European History, but here in the US, every child is taught the lesson of the monopoly era. Rockefeller Oil, J.P. Morgan Steel / US Steel, Tobacco Trust, etc. etc. These companies monopolized the industry in the late 1800s and fixed-prices to kill competitors.
  - hibikir 10y ago
    In the Spain of my youth, the regulation was way past avoiding a monopoly in commodities, and full on to protecting any incumbents on anything, like mom and pop retail. One example was (and maybe still is), to ban discounts on textbooks, as the big margins were a big reason small bookstores stayed afloat. Another was is to limit hours of operations in stores, including making stores be closed on sunday being mandatory, as many family retailers just couldn't man the store without hiring someone, and labor laws made hiring someone for little time expensive. There was also a semi-recent outcry when the government stopped regulating rent hikes. for commercial property. There were plenty of stores in highly desirable locations that were on the same lease for a century! Their monthly rent could be two orders of magnitude away from the space next door. Such level of protectionism of old business models just means that instead of going through pain and optimization for decades, they all get wiped off the map in one fell swoop the minute competition that can skirt the protectionist regulations comes in: Imagine what happens to tiny stores when, instead of first having to compete with US levels of efficiency in big box stores, they get to compete with Amazon. What happens to record stores that can get away with selling music for 25+ euros an album when spotify shows up? So, while there is reason in fearing monopolies, the levels of regulation I describe just have little to do with what the US calls anti monopoly regulation.
deleted 10y ago
[deleted]
mkaziz 10y ago
Comcast and the ISP industry.
- karzeem 10y ago
  There are huge regulatory hurdles to starting new ISPs.
- dragontamer 10y ago
  ISPs are a natural monopoly, but I don't believe they're actively working on price fixing like the Robber Barrons of the late 1800s / early 1900s.
  - deleted 10y ago
    [deleted]
  - jsymolon 10y ago
    The physical plant is a natural monopoly as you don't want everyone to put their own poles and/or wires in. Nothing special about ISPs. See Phone Service and Electricity.
    - dragontamer 10y ago
      I can agree to that.
- rhino369 10y ago
  Comcast and the companies that became Comcast never had competition. It doesn't make sense to be the second cable company.
  - dragontamer 10y ago
    Time-Warner Cable, Verizon, Comcat, Google Fiber... plenty of competition. The issue with natural-monopolies is that when one company starts serving a neighborhood, it makes no sense for a 2nd company to start serving the same neighborhood. That's just wasteful. So there are huge amounts of Verizon-only neighborhoods or Comcast-only neighborhoods out there. -------- Other countries solve this by highly regulating the "natural monopoly" part. IE: If you are going to lay wires to a neighborhood, you become subject to strict regulations. (Ex: utility). Then, they force you to provide multiple choices. The deregulation of power companies for example allows me to pick a blend-of-energy, or I can pay a little bit more for clean energy providers. Similarly, if we turn Comcast into a government-regulated utility (aka: accept the fact that it will always monopolize a neighborhood), and then force it to supply multiple ISPs in its pipes, things would probably get better. My county actually has this deregulation, but it doesn't seem to work in practice because Comcast is both cheaper and got better customer service than the other ISPs that run on Comcast's networks.
dragontamer 10y ago
http://legal-dictionary.thefreedictionary.com/price+fixing http://legal-dictionary.thefreedictionary.com/price+fixing Unlike what the other commenter said... there are plenty of historical examples. > The most notorious of the trusts were the Sugar Trust, the Whisky Trust, the Cordage Trust, the Beef Trust, the Tobacco Trust, John D. Rockefeller's Oil Trust (Standard Oil of New Jersey), and J. P. Morgan's Steel Trust (U.S. Steel Corporation).
- karzeem 10y ago
  Those monopolies were generally protected by tariffs, expensive licenses or regulatory costs, or other laws that blocked competition. Some dominant companies of course emerged in that era, but I'd be interested to see evidence that companies that weren't insulated from competition by government policies actually used their dominance to harm consumers.
  - rayiner 10y ago
    Those trusts arose at a time where there was very little regulation. There were tariffs protecting the industry as a whole from foreign competition, but that wouldn't have affected the rise of domestic competitors.
    - karzeem 10y ago
      Foreign competition is important, because some things (like oil drilling or sugar farming) are only doable in a few places, so if one company captures those places it'll be tough to compete. Also, the fact that some companies became very dominant doesn't mean ipso facto that they harmed consumers. If a company becomes huge fair and square (as opposed to via regulatory capture or other coercive means), it may just mean that people like their product the best.
  - dragontamer 10y ago
    > expensive licenses or regulatory costs, or other laws that blocked competition. Those didn't exist in the 1800s. The rise of the corporation occurred after the 1830s, when Congress no longer had to approve of every single company's existence. After that, it was Laissez-faire economics for over 50 years. https://en.wikipedia.org/wiki/Laissez-faire https://en.wikipedia.org/wiki/Laissez-faire ... basically ending with the Sherman Anti-Trust Act when Americans realized that was a bad idea. http://ncpedia.org/united-states-v-american-tobacco-co http://ncpedia.org/united-states-v-american-tobacco-co > protected by tariffs Globalization wasn't a big thing in the 1800s. US Companies basically only had to worry about other US Companies. There was some foreign trade, but not much. Within the US, a major entity like the Tobacco Trust had the power to set prices. When you're the only company in the entire US, you have the ability to stomp out competition like that.
ee8aq3g5c6 10y ago
The broken taxi cartel wants you to think that high fares were a good thing.
- dragontamer 10y ago
  Taxis once provided a good service. Just 20 years ago, you needed a specialist to take you to random places in a new city. Then a little thing called the "GPS" was invented. Uber takes advantage of the GPS and anybody can now plot a course to anywhere without specialist knowledge of a city. The strange thing is, people seem to have forgotten what life was like before GPS.
  - the_duke 10y ago
    Good point. In Vienna (Austria), taxi drivers had to pass a pretty tough exam which required intimate knowledge of the cities streets. A good driver still makes a difference in the age of GPS, because you can often safe quite some time by avoiding certain points of congestion and factoring in traffic. But with GPS that incorporates (live) traffic data, the additional value is a lot smaller.
- kamaal 10y ago
  Fares are still the same, you just don't notice it because a VC is subsidizing it for you. The day that ends, it will be back to business. Think of Uber as a taxi company subsidizing your travel for a few years. Things will be back to normal once the VC realizes they can't make profits until they charge customers like other taxi companies.
  - ee8aq3g5c6 10y ago
    Why would fares be the same when they don't have to fund the capital cost of a medallion? By the way, according to the article, Uber is roughly breaking even in the US (lost some money last quarter, made money the quarter before).
- deleted 10y ago
  [deleted]
Wagthesam 10y ago
The cement industry is a cartel. They will rally to crush new entrants
- magic_beans 10y ago
  Do you have any links of reporting on this? To be honest, it's a bit of a funny idea, given how banal the cement industry seems. I could see something like this being an interesting This American Life story.
kamaal 10y ago
All capital intensive businesses are this way. Hotels, Transportation etc. Why do you think it costs Uber $1.2 billion in losses just to survive?

This is an interesting angle. Are there examples of it actually happening?

by karzeem 10y ago

This is an interesting angle. Are there examples of it actually happening?

There are no examples. Social/price dumping is the big boogie man here in Europe used to regulate, tax, sue or just plain forbid foreign companies from competing aggressively against local companies. Branding the permanent menace of social/price dumping is just cronyism and protectionism in disguise, it hurts customers, innovation and employment. I hate it when populists and even regular politicians uses it and I hate it even more when people buy it, really makes me cringe but there's nothing I can do I guess.

dragontamer 10y ago
I dunno about European History, but here in the US, every child is taught the lesson of the monopoly era. Rockefeller Oil, J.P. Morgan Steel / US Steel, Tobacco Trust, etc. etc. These companies monopolized the industry in the late 1800s and fixed-prices to kill competitors.
- hibikir 10y ago
  In the Spain of my youth, the regulation was way past avoiding a monopoly in commodities, and full on to protecting any incumbents on anything, like mom and pop retail. One example was (and maybe still is), to ban discounts on textbooks, as the big margins were a big reason small bookstores stayed afloat. Another was is to limit hours of operations in stores, including making stores be closed on sunday being mandatory, as many family retailers just couldn't man the store without hiring someone, and labor laws made hiring someone for little time expensive. There was also a semi-recent outcry when the government stopped regulating rent hikes. for commercial property. There were plenty of stores in highly desirable locations that were on the same lease for a century! Their monthly rent could be two orders of magnitude away from the space next door. Such level of protectionism of old business models just means that instead of going through pain and optimization for decades, they all get wiped off the map in one fell swoop the minute competition that can skirt the protectionist regulations comes in: Imagine what happens to tiny stores when, instead of first having to compete with US levels of efficiency in big box stores, they get to compete with Amazon. What happens to record stores that can get away with selling music for 25+ euros an album when spotify shows up? So, while there is reason in fearing monopolies, the levels of regulation I describe just have little to do with what the US calls anti monopoly regulation.

deleted 10y ago

[deleted]

mkaziz 10y ago

Comcast and the ISP industry.

karzeem 10y ago
There are huge regulatory hurdles to starting new ISPs.
dragontamer 10y ago
ISPs are a natural monopoly, but I don't believe they're actively working on price fixing like the Robber Barrons of the late 1800s / early 1900s.
- deleted 10y ago
  [deleted]
- jsymolon 10y ago
  The physical plant is a natural monopoly as you don't want everyone to put their own poles and/or wires in. Nothing special about ISPs. See Phone Service and Electricity.
  - dragontamer 10y ago
    I can agree to that.
rhino369 10y ago
Comcast and the companies that became Comcast never had competition. It doesn't make sense to be the second cable company.
- dragontamer 10y ago
  Time-Warner Cable, Verizon, Comcat, Google Fiber... plenty of competition. The issue with natural-monopolies is that when one company starts serving a neighborhood, it makes no sense for a 2nd company to start serving the same neighborhood. That's just wasteful. So there are huge amounts of Verizon-only neighborhoods or Comcast-only neighborhoods out there. -------- Other countries solve this by highly regulating the "natural monopoly" part. IE: If you are going to lay wires to a neighborhood, you become subject to strict regulations. (Ex: utility). Then, they force you to provide multiple choices. The deregulation of power companies for example allows me to pick a blend-of-energy, or I can pay a little bit more for clean energy providers. Similarly, if we turn Comcast into a government-regulated utility (aka: accept the fact that it will always monopolize a neighborhood), and then force it to supply multiple ISPs in its pipes, things would probably get better. My county actually has this deregulation, but it doesn't seem to work in practice because Comcast is both cheaper and got better customer service than the other ISPs that run on Comcast's networks.

dragontamer 10y ago

http://legal-dictionary.thefreedictionary.com/price+fixing http://legal-dictionary.thefreedictionary.com/price+fixing Unlike what the other commenter said... there are plenty of historical examples. > The most notorious of the trusts were the Sugar Trust, the Whisky Trust, the Cordage Trust, the Beef Trust, the Tobacco Trust, John D. Rockefeller's Oil Trust (Standard Oil of New Jersey), and J. P. Morgan's Steel Trust (U.S. Steel Corporation).

karzeem 10y ago
Those monopolies were generally protected by tariffs, expensive licenses or regulatory costs, or other laws that blocked competition. Some dominant companies of course emerged in that era, but I'd be interested to see evidence that companies that weren't insulated from competition by government policies actually used their dominance to harm consumers.
- rayiner 10y ago
  Those trusts arose at a time where there was very little regulation. There were tariffs protecting the industry as a whole from foreign competition, but that wouldn't have affected the rise of domestic competitors.
  - karzeem 10y ago
    Foreign competition is important, because some things (like oil drilling or sugar farming) are only doable in a few places, so if one company captures those places it'll be tough to compete. Also, the fact that some companies became very dominant doesn't mean ipso facto that they harmed consumers. If a company becomes huge fair and square (as opposed to via regulatory capture or other coercive means), it may just mean that people like their product the best.
- dragontamer 10y ago
  > expensive licenses or regulatory costs, or other laws that blocked competition. Those didn't exist in the 1800s. The rise of the corporation occurred after the 1830s, when Congress no longer had to approve of every single company's existence. After that, it was Laissez-faire economics for over 50 years. https://en.wikipedia.org/wiki/Laissez-faire https://en.wikipedia.org/wiki/Laissez-faire ... basically ending with the Sherman Anti-Trust Act when Americans realized that was a bad idea. http://ncpedia.org/united-states-v-american-tobacco-co http://ncpedia.org/united-states-v-american-tobacco-co > protected by tariffs Globalization wasn't a big thing in the 1800s. US Companies basically only had to worry about other US Companies. There was some foreign trade, but not much. Within the US, a major entity like the Tobacco Trust had the power to set prices. When you're the only company in the entire US, you have the ability to stomp out competition like that.

ee8aq3g5c6 10y ago

The broken taxi cartel wants you to think that high fares were a good thing.

dragontamer 10y ago
Taxis once provided a good service. Just 20 years ago, you needed a specialist to take you to random places in a new city. Then a little thing called the "GPS" was invented. Uber takes advantage of the GPS and anybody can now plot a course to anywhere without specialist knowledge of a city. The strange thing is, people seem to have forgotten what life was like before GPS.
- the_duke 10y ago
  Good point. In Vienna (Austria), taxi drivers had to pass a pretty tough exam which required intimate knowledge of the cities streets. A good driver still makes a difference in the age of GPS, because you can often safe quite some time by avoiding certain points of congestion and factoring in traffic. But with GPS that incorporates (live) traffic data, the additional value is a lot smaller.
kamaal 10y ago
Fares are still the same, you just don't notice it because a VC is subsidizing it for you. The day that ends, it will be back to business. Think of Uber as a taxi company subsidizing your travel for a few years. Things will be back to normal once the VC realizes they can't make profits until they charge customers like other taxi companies.
- ee8aq3g5c6 10y ago
  Why would fares be the same when they don't have to fund the capital cost of a medallion? By the way, according to the article, Uber is roughly breaking even in the US (lost some money last quarter, made money the quarter before).
deleted 10y ago
[deleted]

Wagthesam 10y ago

The cement industry is a cartel. They will rally to crush new entrants

magic_beans 10y ago
Do you have any links of reporting on this? To be honest, it's a bit of a funny idea, given how banal the cement industry seems. I could see something like this being an interesting This American Life story.

kamaal 10y ago

All capital intensive businesses are this way. Hotels, Transportation etc. Why do you think it costs Uber $1.2 billion in losses just to survive?