@gespilk I'm sure you mean well but there is simply no truth to these claims you're making. It is socialism that creates the most extreme wealth concentrations, we see this in countries all over the world. Essentially no one is poor in a free market because money is easy to make and keep and jobs are always available. "Competition is unsustainable" means nothing. Competition in a free market is always relentless without the government protecting the corporations like socialism does.
@gespilk It's not wrong, just use your head for a minute. Do you know why Amazon and Facebook and Walmart and Google make so much money for their investors? It's largely because of government. Government protects them from competition and provides them favoritism it does not grant to competitors.
@gespilk A free market is simply economic freedom. So you're saying that when everyone has the freedom to choose how to spend their own money, somehow it all ends up in the hands of a few people. That's not what happens at all. Under socialism, the government spends your money and they invariably channel it all to the same people. That's where wealth concentration comes from.
@gespilk So you're saying that if 100 people each have one marble and they keep handing random marbles to random people, somehow 'a few' people will end up holding all the marbles?? Not that that's how an economy works, but you can see how illogical what you're saying is.
@gespilk Not that this has anything to do with an actual economy but just speaking hypothetically, why are you assuming that once someone gives away all their marbles that no one will ever again hand them another in the future?
There is a monopoly in Finland on selling alcohol above 8% alcohol content. All the sale is permited to only one company Alko and they can sell the alcohol at any price they want. It's mostly for "alcoholism reduction" and other bullshit claims... There is also a theory that it limits the alcohol consumption of minors but in reality it doesn't or it leads to minors buying other drugs because they are easier to get a hold of than alcohol.
2:13 Not if A had saved up assets for the occasion sustaining itself until the predatory pricing was over. This is the exact ideal situation to try this, when you have more capital than your competitors. It is also an example of how it is easier to make money when you have it
@@backalleyphilosophy4763 if you posted a link I am unable to follow it. I wouldn't try to speak to whether there is historical evidence of predatory pricing I simply haven't spent any time looking into it although I do remember seeing an article accusing Walmart recently. You seem prepared to counter point the traditional beliefs of early monopolies like standard oil etc. Feel free to do so, I would like to hear your perspective. Either way predatory pricing occurring or not is beside the point. I was merely pointing to holes in the presenters arguments. There were many and I thought I should
@@RoyArrowood But your initial argument is untrue. Any investor will support your business if you can sell products at a lower price than your competitor. It’s absolutely no problem to get a venture funded that is promising to generate value.
I think predatory pricing might only be an issue if the good or service they're selling isn't a physical product (since under a free market, I don't see why other investors wouldn't buy the low stock to resell it once the monopoly increases price again. The monopolies solution would be to lower price if they find those investors to be a threat to their own profits). They'll be right back at the situation they'd first tried to stop .
Woah this video is such high quality and yet it appears to be the first video on your channel. Thanks for the quality of your content you are such an underrated channel
Henry George wrote Progress and poverty in 1897 and was the inspiration for the monopoly board game. This video doesn't mention where the monopoly comes from which is a monopoly in the land. these days you also get monopolies because of copy write and patents. Check out the work of Henry George to understand why land has been removed from text books.
@@wavyy It is. If you're driven out of a capital-intensive market, you now have a lot of capital you're not using. Most likely you're paying for its maintenance, or having its value decreasing. You're not just having that lay around, you want to sell it! If no one wants to buy it, lower the price! When an upoming entrepreneur wants to get into that market, they now have a lowered cost for the necessary capital to do so. It's definitely HARDER in capital-intensive industries, but it still works.
Government regulation actually causes monopolies because more regulation makes it harder for smaller companies to begin and compete with the bigger companies.
I'm on board with free markets, but this defense misses important points. 1) In the price gouging example, you assumed that competitors could buy the discounted products and resell them. But the big company could impose limits on how many items one person can buy, making it not practical for competitor to buy all products at low prices. 2) This did not address network effects, such as seen in phone companies or social networks, such are Facebook or UA-cam. When everyone is using one network, switching is useless, because all the people are on the original network.
1) That is only going to harm the company trying to predatorily outcompete their competitors. A lot of counters to the example usually miss the fact that markets are incredibly volatile, and such a competitor would have to face newcomers to the market as well, those that can operate at lower costs without lowering quality or quantity. Competitors can also just straight up buy portions of the competition, if they are a company with stocks in the stock market, and this can go both ways. 2) MySpace, AOL, Yahoo, and so on were all once said to be monopolies, and now they have faded into irrelevance. People switched then, and people are switching now, and will continue to do so. The question is of whether we can get competition that can provide an equal or better service than the current status, and whether they can market it well enough. That is a different question entirely, one that can only be addressed by the market, as government intervention would directly harm these smaller companies due to making it severely more difficult to set up. Especially when it is so easy to label anything large a "monopoly".
What about property monopolies?? In Edinburgh a bunch of hedge funds bought up the majority of the flats in the center of the city. They hiked up the prices across the board because the choice was now pay more or live on the outskirts, No competing flats at a lower price. no space to build more. I'm not trying to start an argument here this is genuine question
+minispike0000 well, the outskirts are the competition in this case. The reason they could hike prices is that there are still people willing to pay that much. And please remember, that this is not a free market economy. We may suspect, that the hedge funds get some kind of special treatment from the gov. But I don't know if this is the case, so let's say it's worth checking
minispike0000 Case will end up likely this as mentioned, they will choose to live outskirts and if there are people dwelling in outskirts, transportation must be provided fır them. Hence, we will end up with a situation commuting to outskirts efficiently. Don't forget this, if there is no customers, there is no distinct Divergence between whether you offer a product or not. Edinburgh's citizens will be encountering this fact.
if people don't have enough to buy, it doesn't matter what price they set it. people will just live somewhere else. goodluck to those greedy people paying the property tax
Government raises prices of housing. Look at big cities like San Fransisco, Los Angeles, etc. Prices are overwhelmingly high due to the endless taxes regulations and fees, which also makes California the most expensive state in America. Government makes it far harder for consumers than any free market business would.
It’s striking to me that people still believe low price & higher quality are the only factors when it comes to customers making the purchasing decision. Marketing has a HUGE influence over consumers. A product can be overly priced and of poor quality but can still be solid hand over fist due to marketing. And startup competitors often cannot match the marketing spend of the big boys. Additionally monopolies can erect barriers to entry which prevent potential competitors bringing low priced or higher quality products to market. In an unregulated market a website like Amazon could also be an ISP and put tolls in front of all competitor e-commerce website. No matter how much better the competitor is, the tolls they would have to pay or the subsequent slow connect that would result from not paying the toll would reduce or eliminate any hope they had at taking on Amazon. I love markets, but it’s important to remember that they do indeed tend toward monopoly (even if that producer doesn’t have the best quality or prices), and despite how this video would like to frame it, once a monopoly is establish it can do loads of stuff to eliminate competitive threats. Given all of this we need to pair our markets with regulations to ensure competition.
There are three factors at play that cannot be ignored. Startup costs, which tend to increase as industries modernize, making entry into a market more difficult for new competitors, thus un-freeing the market. Network effects, which are common in natural monopolies and big tech, where the more monopolized the industry is the less demand there is for competition. Scale, where larger firms can more efficiently produce products than any new competitor, permanently pricing out their competition. These are three inescapably real features of our world that prevent the free market from existing.
@@L154N4LG4IB First of all, things actually get cheaper, not the other way around. Although video games are getting more expensive, the truth is that the industry has become more open to a wide array of creators because it is becoming cheaper to make. This is true for all industries. Second, how the heck can the more monopolized the industry, the less demand for competition. When there were more competitive streaming services for the user to use, the consumers were demanding less competition. The second reasoning doesn’t add up at all. Lastly, although larger firms could produce more products than their competitors, the ultimate judge is going to be the prices and demand of a certain product. If the items from a large firm feels too expensive, then there will be a firm that would have a cheaper alternative. Also, big firms with a more expensive prices would have a severe misallocation of factors they would have to account for since nobody can afford a thing they find to be very expensive, causing bankruptcy. Ultimately, it’s the consumers who choose which competitors a given industry has, not the other way around. This comments is severely misinformed and I hope that this person could learn a thing or two more. If you want a deeper explanation why monopolies can’t exist, I suggest checking out Liquid Zulu’s video on Natural Monopolies and MRH’s videos on debunking every anti-capitalist argument, which has a segment dedicated to monopolies.
1. Increased startup costs are a result of government regulation and compliance, not technology. 2. and 3. If a business is forced to charge reasonable prices at a low margin to remain competitive then it is, definitionally, not a monopoly. Hence why government is a monopoly, since they can charge you for services arbitrarily, and private businesses in a free market cannot be.
The most important issue here is whether we should keep referring to pitiful collections of axioms, assumptions, unreasoned conclusions, lies and verbalism - all with no data or a real-life example - like the one above as "economics" or as "a modern approach to parody that can revive the genre". In any case, following the arguments of a free-market economist for a couple of minutes can really challenge one's rejection of fortunetelling or astrology. As for the good people convinced by this irrational monologue of the improbability monopolies and trusts ever to exist in a free-market economy, I propose you make a quick search for luxotica, the number of car manufacturers over time, the companies that control the food market, and so on. Νeoliberal policies and market monopolization are inherent to one another. In fact, any evidence relative to the matter you'll ever find will only back this statement. The video narration of the "theory", here, is pathetic: Right after the narrator tries to convince us that monopolies don't exist in a free-market, he argues that -ok- even they do, it's a good thing! LOL. Anyway, enough said, I'm off to my next startup that will challenge the monopoly of amazon. ops, sorry, no monopolies exist, damned
This video assumes quite a bit. Lets take amazon for example, how long would it take for someone to create the logistics centers and warehouses that amazon has now, also where would anyone even get that kind of capital to be able to initially start the company. It comes down to access to capital and time, a poor person cant start a company to compete with amazon no matter what they do, and even if they did amazon would just use predatory pricing to make them go bankrupt, then go back to being a monopoly. Then the 2 years or so it would take the next person to try again, they would recoup the costs of their debt, and do it all over again.
@@saif-al-islam Except they aren't doing a very good job at it. They're competiting to survive because Amazon has already taken a substantial part of their market share.
@Nlex But arguably the reason you can get that stuff so cheap is because of predatory pricing. It's no secret that amazon loses money on its retail operation. They purposely do it to gain market share, aka the textbook definition of predatory pricing in order to create a monopoly.
What happened if the monopolistic company acquire huge no of resources and achieve a scale of economic for production and then prevent others competitor to enter in the market and then increase the price ?
this theory assumes that everyone knows what the cheapest product is, which lasts the longest, which is of the best quality and that people in general know what is best for them. it assumes people are rational, that politics is natural and that there is no possibilty of corruption or lobbying or misinformation in general. In this worldview a person can not mislead another and can not be mislead by another and that is just COMPLETELY ignorant of how life works. i have spoken:)
+Paulo X people are rational in satisfying their needs, even if for the third party it may seem the are not. The movie is about free market, which we don't have. Lobbying and corruption is of course a problem, but it is a problem because the governments have the power to regulate the economy. About cheating and misleading - free market does not mean absence of the law.
Paulo X As an economics student Paulo is right. Asymmetric information. Classic examples are Car Dealership and Energy Companies. A completely free market is a theoretical model - not a true representation of society or how humans actually behave. That’s why a lot of work is being made on behavioural economics to study this phenomenon. Nudge theory in particular is very interesting.
ScapeNation If you make a consensual agreement to purchase a car for an agreed upon value at a car dealership then I wouldn’t think there’s anything wrong with that. If the buyer decided not to research the value of the car, then they can easily be ripped off to which that would be their fault for agreeing to the price. At a car dealership they’re free to bargain the price and there’s not much room for that if in this age you have trade in value statistics such as Kelley Blue Book that prices a car based on market. In the end the real ones who set the prices are the manufacturers of the cars anyway because it has a set starting price and it will devalue over time with normal wear and tear as well as accumulated mileage. The cheaper the cost to make the car, the cheaper the price it can be sold for and thus the cheaper dealerships will have to sell cars for. Nudge theory I believe works very well in a capitalist economy. There are really only 2 behaviors a human can have when running a business. 1. Be generous and pay as much as you can to your workers. 2 Maximize your own profit. You may even call this greed if you’d like. If you give incentive to the doctor (nudge theory) to maximize their profits then it’s easy to see that they will. They will want to expand their business to supply the demand because they want to maximize profits and in order to do so they must hire more people. That also creates more jobs which is a bonus beneficiary to the aim. If you don’t pay those workers at a reasonable price, then it gives those people an incentive to quit and walk down the street to the competing clinic and work for them instead because they pay more and it turns out the workers also want to maximize their profits. It also gives incentive to the 2 clinics to become better clinics because they are competing with each other so therefore they will both find ways to provide top quality service and seek top quality treatment methods. LASIK Eye Surgery is a great example of why Capitalism works. Insurance does not cover the costs and it’s up to the providers to set the price. As soon as the innovation was made public, we saw an increase in ophthalmologists and thus began the competition for LASIK pricing which has gone down by over 50% since it got started and has still continued to go down. Proponents of a market based economy rely less on theory and more on data especially when we have such vast access to information today. If a surgeon performed 10000 surgeries and 5000 of those were unsuccessful, then nobody is going to want to take a 50% risk and the surgeon will go out of business. In fact, they wouldn’t even be allowed to begin performing such procedures until their medical devices and procedure have been regulated in phase trials by the FDA. So there is still law in place and data must be submitted that can freely be accessed by anybody. Including additional laws that would take a product off the market if dangerous effects are identified. A brand of eggs this year was recalled (millions of eggs) because they were able to link around 35 sudden cases of salmonella to the brand further supporting that laws still govern a market. I’ll add that they detected that very quickly considering this was across the span of several states to which word got out to and received plenty of news coverage over the internet and tv as well.
@@EconClips Someone really needs to tell you the condition the US was in before Roosevelt climbed to power, with constant worker strikes. Lobbying and bribing was KEY back then to maintaining their monopolies.
@@javierititin but he has a point, why was loobying and bribing so powerfull? because goverment has a lot of power to maintain that monopoly. If the goberment did not had that power the bride would have been useless.
I know this may be somewhat off topic but how do we tackle the problem of someones worth on the market being so little that they themselves can’t afford proper housing, food, and other necessities?
Rockefeller gained his market share by providing a superior product at a superior price. His competitors funded a propaganda campaign against him for it.
Rockefeller created insanely low prices. Before them, only the rich had oil light - whale oil. But after, they lowered the price of oil so much that the average man could finally afford oil light in their houses.
Monopoly is possible in cronyism Or even in demand side economics And in Socialism it's obviously the monopoly! Free market is sole fighter of monopoly
Big tech companies hold monopolies now because of the insane amount of IP patents that protect them from anyone else making any sort of competition. Plus they have bought off a lot of people who make up the anti trust commitees. Bigger government is never the answer.
@@alexcrosby that's not exactly what I meant. Ip in terms of branding should be protected. What shouldnt be protected however is every single invention or new way of doing something under the sun. For example amazon has a patent on the 'one click' feature on their ordering process. Facebook has up to 2000 patents. People will tend to buy a brand due to the marketing, reputation, and price of the product, not due to the inticancies of the technology itself.
@@alexcrosby what a good comeback. "X is flawed" "so you're saying we need to get rid of X" No; they're saying X is flawed. Lmfao you can't just strawman and expect to make a valid point what the hell hahaha
@@MrJabbothehut Nope, they hold monopolies because of network effects. You don't want to join a social network that is used by no one. You want to join one that is used by your friends too.
If your electricity company charges unreasonably high amount because they think they are monopoly, it could make sense for every house in your neighborhood to switch to a small gas generators or something similar (same thing with if your water bill is too high your dig your own well). Worst case everyone in your region moves to a new place for cheaper electricity and your current electricity company will go bankrupt because no one will use their service. There's always alternative in a PERFECTLY FREE market.
@@yagotta1 Well the monopoly electricity/water company too knows that people are cheap, and that's why they will not increase price indefinitely knowing that over a certain price point people will get creative and stop using their services
One thing that isn't mentioned is how government intervention and loopholes make it completely possible for one company to pay 1% effective sales tax and another one 20%, meaning more profit or lower prices for the customers, meaning an unnatural advantage. And next to that advantage they are more likely to get bailed out in case of crisis. Germany is a great example of a nation degenerating mainly based on this kind of economy.
The gov putting up the tariffs will only hurt their economies in the long run, as the company exporting goods will simply go to another country with lower tariffs
I agree with most of it. But not with the part of natural monopolies. For instance, if the water company abuses of its position, it would not be practical for another company to duplicate the water pipe network. If you have 2 companies sharing the market the prices would tend to be higher because you would have 2 networks to maintain that would be used below their capacities.
In a perfectly free market, if water company abuses it's position you dig your own well or move to a place where the local water company doesn't abuse it's power. If the prices are too high because only 2 companies are sharing the market, a third company will come in to steal market share by offering lower price. It's only possible for the 2 companies to share the market forever is when the government comes in to block the 3rd company and destroys the free market, which happens all the time of course.
what happens if the particular market has high start up costs? Eg. utilities infrastructure. Then if a company does start dumping and gets rid of its competitors, will new businesses not start up since it costs too much leading to a natural monopoly?
I have to disagree. Yes if a monopoly is bad enough change is still possible, but with huge cost, so a regulated monopoly can be cheaper. The State itself is also a monopoly somehow yes there is still possible to rebel but with cost.
Private entrepreneurs are the ones who take up this cost, of their own free will, because they know that it's possible that their investment could pay off exponentially if they are able to seize part of the monopoly's market share. Usually a "regulated" monopoly simply involves the State using violence (regulations) to keep competitors from entering the market and breaking the monopoly.
@@hrovardran4755 It is hard to admit, but yes, for the most part, you are right. The state is very bad at what he does. The stat abuses its power. And here, where I am located (CH), we have many rules in place which explicitly prohibit competition or make it very hard. Most notable is public transport. Still, for example, power grid, water pipes, it is n very hard under normal conditions to be competitive. I am Se Uri
In theory it is this way but in practice things never go so smoothly. if there was absolutely no economic policy and 100% free market with no rules, then whats to stop me from doing highly efficient neuromarketing, or from providing credit for diverse reasons with insane interest rates to dumb people that would accept it? for example Forex companies with no licence that cleverly bypassed laws to push their "service" and convince people that this was a good idea when in reality people ended up trusting them and losing life savings to a point where some committed suicide. so to what extent do you not regulate to protect the people basically from their own stupidity? or is the argument here that the free market also acts as a sort of economic savvy natural selection filter? could be but seems kind of cruel.
This isn't even an issue. In a free society people have to be free to put their life savings (or their life) at risk. No one can judge the value of that risk. Family lines that teach their kids caution and skepticism and critical thinking will flourish and others may not. Freedom is not cruel. It is government control that is cruel.
Your forex example seems to be one side of spectrum. What about the other side where a forex company with no license does have the 'know how' to create wealth for its clients, but doesnt have time/money/resources to get a license, probably because of it being small? In this case this company could create several millionaires who will most like spend more and increase wealth and economy. In a free market, you could be in either side of the spectrum, while in a regulated system, you dont have this option to choose. It seems like at the end of the day government regulating such matters would work if they knew what they were doing, but it seems like in practice this doesnt happen. Like you said there will be a lot of individuals who make poor decisions, and I think the government should advise instead of regulate, but a free market is self regulating, a scamy forex company wont be in business for long as people would start vouching against it which seems like a bad long term business model. The incentive to run a proper business that provides value to customers seems stronger.
I wish all of the video would come up but I was going to say monopolies are bad when it drives other markets away and now the sole company drives prices and you the consumer have no way of fighting against it. Like how Wal-Mart would open business and sell the same goods and services in a local community which would lower prices that consumers stop buying from the mom and pop places and then it caused those business to go bankrupt. Some monopolies are necessary though like our electricity and water and making sure the price is affordable for most people who live in the community because not everyone wants to have telephone lines going over their property and such.
This is oversimplified and forgets about supply chain, violence, and the fact that starting capital is not as easy to get as you expect. If you have diversified assets, you can completely break the system, and literally kill your competition.
Your argument is a bit to oversimplified what have violence to do with competition what did you mean with that? Second you say something about supply chain but what has this to do will supply chain for smaller companies will increase the price for a product about 200% like in the video the price did go up about 200% and i am sure that supply chain can't inrease price that much.You must show proof that supply chain cost less for big companies on making these argument.If it does then the whole alcohol industry would be monopolist today but it is not.My third point is that it would be very easy to get a investor for a monopolist market the prices increase the for alcohol about 200% with less quality many investors would be interested in your company because you can produce for 200% less with better quality so you would get all the contracts from the supermarkets and would easily compete on the market.
What's stopping a company from a gaining sufficient amount of wealth to engage in predatory pricing practices on the international level? Or crushing startups with other anti-competition tactics? Surely a monopoly with enough money has plenty of ways to crush startups, even if they buy assets from bankrupted competitors. This video seems incredibly optimistic and is making the assumption that all industries have meaningful alternatives. In the U.S., trains and planes are not a valid replacement for cars and roads. "Government intervention causes harmful monopolies" This sounds... baseless. And untrue.
" "Government intervention causes harmful monopolies" This sounds... baseless. And untrue." If you don't like evidence then I'm not even going to speak with you.
I don't care how much money they have, if they're engaging in predatory pricing, their fall is guaranteed. As soon as they're out of money, they're done. People seem to think that business owners are all-powerful gods who can command minions at a whim. That's not how businesses work in a free society. But that is how government works. Why should we put more trust in political self-interest than economic self-interest?
Stephen Kendall "their fall is guaranteed" Is that why Wal-Mart and Amazon still exist? They are both known for predatory pricing. en.wikipedia.org/wiki/Predatory_pricing
Stephen Kendall Business owners aren't all-powerful, but corporation leaders are extremely powerful. That's not even mentioning Mafia leaders, which have existed even without government. See: History "Post-feudal Sicily" section. en.wikipedia.org/wiki/Sicilian_Mafia It was considered to be in response to a *lack of government* that the mafia came about in Sicily.
Actually, when you say that monopoly can « theorically » arise in the free market, this is false. Your error is to only comparing the market of alcohol, but why so ? Customers also use their money for a lot of others things. When a customer buy something, it means that he also choose to NOT buy something. If I buy a book, this money isn't earned by the alcohol industry. So actually, in the free market, every commerce is competing with each other. Don't believe me ? See Amazon, for example. In the beginning, they were only selling Books, now they sell everything (to minimise the competition).
This video is not historically accurate at all. The Standard Oil monopoly formed by keeping their shares private and simply undercutting competitors. They also made shipping contract deals with railroads to ship their oil at cheaper price than competitor oil by agreeing to ship all their oil through a specific railroad. They essentially became vertically integrated. The reason vertical integration is illegal is because IT LEAD TO DOZENS OF MONOPOLIES IN THE UNITED STATES IN THE LATE 19th CENTURY. Monopolies are a naturally forming occurrence in an unregulated free market. Look up the “South Improvement Company” for further information on its original formation. It’s a textbook case of how to create a monopoly. Now we have oil, telecom, internet service providers, jewelry manufacture that are all monopolies.
What about artificial monoplies? One owner can dump because he makes money on other products. So he has the advantage over a start up because all he has to do is break even for one product and profit on shares or stocks of another product or company.
EconClips exactly,I think you should have ended this nice video with “monopoly under a free market should not exist”. Also replace nationalisation for privatisation.Finally cheaper and better is mostly a marketing strategy more than anything else as companies strive for increasing profits to stay relevant and gain leverage over competitors. Regardless, I believe that in the long run a reputable and reliable company with good customer service could justify its premium. Monopoly is in its core the economical cancer plagued upon humanity. More support is needed for small and medium business to compete but if that support comes at the cost of higher taxes and more lending than it just digs the hole deeper.I see the overpopulation,depletion of resources and monopoly of what is left as humanity domesday.Currently 90% of the population is born and dies on their knees with both hands tied behind their backs,crippled by the weight of inequality and debt. I see the overpopulation,depletion of resources and monopoly of what is left as humanity domesday. And even if we manage to find life in other planets across the universe we will still continue as simply commodities in the economic game of power. Good video.
If all companies owned each other's stock, then they would essentially become one company, hence cartels. And what's to stop the cartel from buying out would be competitors?
Addressed at 6:43. 1) Competitors have a dis-incentive to sell their company to the cartel and 2) members of the cartel have a huge economic incentive to break from the cartel, lower prices and capture a much larger market share. This is why in all of history it never sustainably happens without government meddling.
If you try to buy every competitor that pops us, you encourage even more people to start new ones. The supply of startups becomes infinite and the cartel runs out of cash.
@@nowheretosit ok but what if the cartel had enough capital to drive prices down below that of the splinter company? surely being part of the oligarchy would be preferable? and how are competitors dis-incentveised to sell? everyone has their price, its just if the monopoly can afford to yet
Smi- 1) For as long as the cartel has prices artificially low, they are not a harmful monopoly. They are a beneficial monopoly. But the moment they raise prices to be harmful they will will be overwhelmed by competition again. Competition is so relentless is a free market you can not maintain a harmful monopoly except with government help. 2) I'm the cartel. You're the upstart. You know that everyone in the cartel is forced by agreement to have a fixed price. This is the best time in the world for you to be in business. You can set your price lower than the cartel and make a windfall. When then cartel wants to buy is exactly when you want to be in business against them. 3) Everyone has their price? If the cartel offers market value to buy out competitors, most will not sell. The cartel has to offer higher than market value to have any chance of buying up all their competitors. Each remaining competitor will ask for more and more money. This huge supply of purchasing cash will attract more upstarts who demand even more money. Like Ray says, the supply of competition that needs to be bought out will be infinite. Ask yourself why all the big companies of the world all support big government? Is it because the government protects the people from these predatory companies or is it because the government protects these companies from competition and allows them to maintain a monopoly?
If you have usury then the usurers end up owning all the stuff and anything they immorally want from people and small children as payment for the debts. That is monopoly.
cartelization destroys the companies in the cartel and theri competitor becomes a short term monopoly :) and then other companies enter the market and we end up where we started but with increased innovation
There is no way to separate the economy from politics. The capitalists will always find a way to influence the political system. In the US, for example, the vast majority of democrats and repiblicans are funded by corporations (which also eliminates "competition" in the political arena - they can't be beaten by any politician who is not heavily funded by them), and accordingly promote laws in favor of the big corporations. There is no such thing as a "free market" - it destroys itself.
This argument is based on them being equal, but in reality they are never equal, they all have different circumstances, even a smart strategy will eliminate competition, let alone luck, etc. Also, prices are not the only way to eliminate competition. Problem is monopolies have more resources for everything - they can afford to have bigger budget on marketing, they can influence customers, create brands, sue competitors, extort them in any legal or illegal way. Cartelization was illegal) In "free market" this is very simple road to classical monopoly. This theory for children or braindead assumes perfect distribution of information, perfect rationality of people, perfect market forces, that dominate any other forces. Free market is a first step to absolute tyranny.
"A smart strategy, let alone luck" You're missing the point of the video. In a free market, a company must offer two things to exist as a monopoly: lower prices and better quality. Indeed prices are not enough, quality must be equal or better than its competitors. In which case, if it manages to out do its competitors on both, the customers benefit. If the company then decides to increase prices, or lower quality, a new competitor will rise out of demand. The reasoning you use "in reality they are never equal, they all have different circumstances" is exactly why monopolies have never existed in a free market. You're assuming in your argument that a rich monopoly will buy out poorer companies trying to compete, but you're missing the fact that even if a company manages to monopolize one good or service, it does not mean that it is the only company with a lot of wealth available to it. Other companies, which have little to no involvement in that market, will become interested and invest their capital/resources into offering a better good/service if they perceive a demand for it. Keeping up with the monopoly, through the use of the measures you mentioned, becomes a drain on the monopolies resources. Of course, you mentioned law suits, which would not exist in a free market with the exception of tort liability, so that we can discount from your argument out right. In a free market the possibilities are limitless, there are too many factors for the monopolist to consider, infinite factors in fact. The best a company can do is compete.
@@fernandomarturet2486 A monopoly doesn't need either lower prices or higher quality to exist. It can drive competitors out of business through simply spending more money advertising it's product. And I don't even have to focus on that to be against free-market economies. CHILD LABOR would be everywhere in a free market, if you don't see that as a problem then you have problems of your own.
I forgot that step in nazi Germany when they made the markets free. Oh that's right, they didn't. They took government control of the markets because they were na-zis, national socialists
I - I am very late seeming this came out years ago but WHAT! You can give scenarios saying in such and such scenarios the free market will contradictory to belief stop monopolies. Yet monopolies did exist in free markets thus you must be hiding something because surely when there was a free market in America before the anti trust laws there shouldn't have been monopolies but damn there was because they grew slowly bought out the competition until eventually there was no one major left and the companies could then stop other companies from competing by buying out more companies or price dumping in areas with new competition with higher prices elsewhere. Please do not skip around case studies next time please and please don't pretend the scenarios you give are the only possible way for someone to try form a monopoly in a free market
Can someone to me explain how B, C and D buying A's stocks prevents the monopoly? Henry Dow bought a bunch of the price-dumped oil from the german cartel, but I don't see how that's the same as buying it's stocks..
I guess it assumes that the dividend payments will bring them the lost revenue. Essentially the profit A makes for it's shareholders will partly be given to his competitiors B, C and D, which means their loss in revenue and thus profits isn't that bad, so they can hold out longer.
in my area Comcast has a monopoly on internet sevice... how do we stop companies like that? they are the only company offering high speed internet where i live and they set their prices very high. Verizon is the only " competitor"... but they are not allowed to bring fios to our area, making it a terrible product. how is that fair?
This is an odd situation where cable and internet companies run like cartels an have specific regions of "territory" realy the only reason this is possible is with cable requing so much infrastructure. So I dont know how to deal with this.
You missed the #1 way companies monopolize -- buy out the competition, to include fledgling startups that pose a future risk or have an innovative way of doing things.
First of all my friend monopoly comes from Greek word mono(single) polo (sell)..so monopoly doesn't exist in modern days.maybe only in North Korea where the government owns everything.
I read the Dow's story, it is interesting tactic. I am not sure if it will always work. If company A can sell above profit margin and competitor can't follow if they are smaller. Also, why would anyone buy from B, C, D if A has the lowest price. Choosing train or plane is not always an option if your city, or the destination, does not have that kind of connection. And monopolised alternatives will also be expensive. Bottled water is much more expensive than tap. And you can't bathe in bottled water. And not everyone can dig a well. Building double infrastructure does not make any sense, as you also mentioned, and the price rise that to be an option is probably extreme. The cartel will send goons rather than go bankrupt because of a small factory. If police intervene they can pay them. Or they can buy them, or lower the prices as in first example.
Only by the use of pre-existing monopolies. Which you ask? Currencies. They have a flaw. The zero lower bound. This turns them into a monopoly, once it piles up under private control (the 0.1%).
4:30 You're assuming that a) the product is relatively easy to produce (since if you didn't know how to produce it, you'd not be able to restart competition once the monopolist starts abusing their position) and/or that b) the product is replaceable with similar products. These assumtions won't always hold true: Computer chips are hard to produce so it's hard for outsiders to enter the market (that'd be the case even without patent protections). Computer chips are also hard to replace with alternatives, since there are many things you just need these for. Also, there are markets where being a monopoly makes it by definition basically impossible to lose, like instant messengers. If nobody uses my new instant messenger but everyone uses WhatsApp, then nobody will try my new instant messenger (even if it's better than WhatsApp) since they can't use it to chat with their contacts who use WhatsApp. WhatsApp however will become even more ubiquitous as people expect you to use it. Similar deal with learning-based programs: the more data a service has, the better the service will become. So a large service (like Google Search or UA-cam) will grow faster than a small one ever could.
Now i understand why google and apple are not monopolies.. Because although they have the boggets market share, no one prefer the competition, because they are sumply better, and even when they are much more expensive, people mostly don't want to use the other ones
The cpu monopoly? There are only 2 cpu makers, one is intel other is amd. What if intel make amd go bankrupt and then have monopoly. selling cpus for $2500 each. every computer, phone, tv needs cpu. And it is too expensive for someone to start making new cpu company because the starting upfront cost is waaay to much. And we need computers for healthcare , police, everything. how to solve this?
Well If there is a big enough demand , then people would invest alot in a new cpu company. And If no one buys their CPUs for 2500 dollar they would need to lower their prices
@@R3tr0v1ru5 a truly free market would not allow to one firm to interfere with the freedom of other firm. Then it depends on the concept of money we have and the rol of banking in this free market, if banks merely safekeep the money it is only a matter of hoarding deposits, if we treat fiatmoney as a commodity then we have a different understanding on money
wtf you are saying that people would buy bottled water for extortionate prices or build a really expensive well over the extortionate prices of the water companies? Either way the consumer is getting royally fucked!
If enough people stop buying water then the company would collapse. In Poland the goverment has 100% monopoly on water infrastructure so yes, we'd be getting royally fucked.
2:26 Three new companies will have a hard time "popping up" if company A purchased b, c, and d's old factories with the express intent of prohibiting others from entering the market.
@@klmklm16 I replied to this video 4 times with different criticisms. This is the fourth. If you find the others and read them this makes more sense but basically company A does not have to take on debt.
This video ignores the most basic way monopolies begin which is simply by being able to produce more of a given good. The more of a given good you can produce the cheaper it can be produced per unit. This enables the company to sell it cheaper, eliminating competition who simply cannot lower prices that much. This is how monopolies are commonplace in free market economies. He didn't say anything about mergers and how relevant they are to the substitutes in the market. If one company owns the the substitutes, are the really substitutes? He mentioned at the beginning of the video that companies could engage in predatory pricing, but seems to forget later. He mentions something about smaller companies buying the stock of the bigger one. Maybe he knows more about stocks than me, but I would think if smaller companies started buying Apple stock, Apple would be very happy about it, and become bigger. Also, he seems to think airplanes are a substitute for roads, which is weird and wrong. And wells are a substitute for water bottles, was that what he said? Also weird. He mentioned the brilliant economist Murray Rothbard. My comment can only be so long but just look him up folks, because he's not so brilliant.
That is exactly correct Roy. Most monopolies form through private companies and private equity where outside investors may not buy shares. The Dow example is valid, however, there are hundreds of other monopolies that formed through private companies.
Just read my other comment on this video and you can see several examples of natural monopolies forming. These monopolies were able to form without any government assistance. They didn’t even get tax breaks because there were no taxes on corporate profits in the 1870’s.
@@SCHMALLZZZ 1) none of its game modes qualifies as an "arena shooter". 2)when I said that it is its own subgenre I meant that team fortress 2 balances the weapons like no other multyplayer game in the industry. all the other multyplayer games tend to have extreemely generic weapons. when making a sidegrade they just change some of the basic stats of the weapon (reload speed, clip size, damage etc) and they call it a day. team fortress 2 however is the only multyplayer shooter that often adds aditional abilities to the weapons. in some cases it even lets the players use non-weapons in their weapon slots. for example, in other shooters things can go like this: here is a shotgun that can shoot up to 5 times with no reload, and it deals so much damage that it can kill with one shot everyone with a headshot in close range. here is an alternative shotgun that can shoot up to 6 times, it shoots 20% faster but deals less damage meaning that some players may survive the initial shot. in team fortress 2 weapons can be more creative. you can replace your original rocket launcher with an other one that heals you whenever you damage an enemy, with the downside that it shoots 3 rockets instead of 4. you can replace your submachine gun with a bottle of piss that makes the enemies take 35% aditional damage when injured. you can replace your axe with an other axe that deals aditional damage on burned targets and gives you a speed boost if you kill them. and more. there is not a single multyplayer shooting game in the industry that can compare with the creativity of team fortress 2.
@@SCHMALLZZZ no it is not. do you even know what that term means? not a single one of its game modes is an "arena shooter". this game balances weapons with such way that no other multyplayer game in the industry does. when making sidegrades the other multyplayer games in the industry just change some basic stats of the weapons(damage, magazine size, firing speed etc) and call it a day. team fortress 2 however often adds aditional abilities to the side grade weapons and even lets you add non-weapons in your weapon slots. for example, in other shooters sidegrades are like this: there is a shotgun that can get an OHKO against anyone with a successfull headshot and can shoot up to 5 times. the sidegrade of that shotgun can shoot up to 6 times, shoots 20% faster but deals less damage meaning that some people may survive the first headshot. in team fortress 2 the sidegrades are more like this: you can replace your rocket launcher with an other rocket launcher that heals you whenever you damage an enemy, and the downside is that it can carry up to 3 rockets instead of 4. you can replace your submachine gun with a jar of piss that makes opponents take 35% more damage from all sources. you can replace your axe with an other axe that deals aditional damage against burned targets and gives you a speed boost when you successfully kill someone.
Each buyer doesn't have to be perfectly rational in his buying habits. It averages out. If the price is higher, fewer will be sold. If the quality goes down fewer will be sold (in the long run).
Telecoms in the USA have local monopolies without government intervention. Rates keep increasing while their service remains lousy. Competitors bypass areas with existing monopolies.
I agree with everything you said, except that digging wells or buying water bottles are no substitutes for tap water. wells are no garantee for health and water bottles use plastic, harmfull for the envirnoment. I think you are too much biased on the austrian economics view. there are some situations the market won't work, the water supply being one of them.
I just subscribed but you must be high. Not only monopoly is posible, it exists, in all types of economies. It’s the ultimate business goal. Who wants a multinational if not to rule. Who ever has 70% even less of the market share has a monopoly. A true monopoly it’s not to be the only company, but to call the shoots. To be honest, niches are not even considered. If X decides to rise prices 20% and no one blinks its a monopoly. You should be a bit more down to earth and pragmatic.
carlos- All the monopolies you're thinking of are specifically caused by government meddling and use of force. Ironically, it's the socialists calling for ever more government that have made possible the monopolies they claim to hate so much. If this isn't ironic enough, the socialists want to make everything a government backed monopoly.
There's plenty of competitors to these brands (here is US.) And like is mentioned in the video, these are not harmful monopolies. We are not being overcharged for pepsi or coke, they are comparable to other soft drinks, if not cheaper.
Your looking at the wrong problem It's when company's own medicine and they literally work with doctors to proscribe lethal medicine to non lethal injuries.
So US restaurant chains provide better quality for better prices than independent restaurants in Europe, where predatory practices are/were harder to establish due to government control? This video is ridiculous.
@@gartner101 1: Merely having lower prices than the competition does not mean it is “predatory.” It is evident by the fact Amazon is still running that they are not “predatory.” Two: considering your dubious use of the word “exploited,” I’m assuming I’m about to hear a mixture of “they’re not being paid what they’re worth” and “Jeff bezos is too rich.” The answer to both those statements is simple: the employees joined for the agreed-upon price and can leave any time. COVID’s artificial crisis aside, they can quit as soon as they find a better job.
At the end it does. It's a 'natural' monopoly. But even then - according to the Chicago School its not a problem either, as they have found out via some real world examples in the US. They boil it down to government intruding and picking winners (granting monopolies to private interest) which essentially shuts down competition and voila, you get a mess if you're not very very careful. The more problematic monopolies are the ones where the government is responsible, but no one knows or realizes. Check out the zero lower bound of currencies. They turn money into a monopoly, once it piles up in private hands. That's why we go from Capitalism to Cronyism on a regular basis (~50-70 years or so). The USA is ripe for disruption due to that..
@@chbrules If you mean alternatives in the plural sense, then each competitor is capping at 25%, or in a more realistic world, the best of the weaker ones is just above 30%. There is no way they can keep up with the marketing machine the one with 50% has. Also that is is quite the excuse for conglomerates. Control the biggest slice of every market and people won't complain, not even the government. Actually, given the state Mitsubishi is in, making high quality products in so many areas, there is not a single factory, office or home without a Mitsubishi equipment, be it A/C, a pencil or a car. Not just that, they gained so much power over time that today they have blackmailing capabilities over the government, and no, there were no "government interventions", and for many people out there, stop believing every monopoly is a government intervention. Industries are greedy and they know very well how the capitalist world works (yeah they won't make shitty products just for profit, but they can very well control what you buy). Soon, you will see this happen within USA with Disney buying big companies every 3 months. Even if they have only 30% of market share per area, they will soon control what most of us see and we won't even know. "Ah but people will look for alternatives". Exceptions. Tell me if there are equal amounts of people using Spotify and "alternatives". There aren't, legal or illegal. Bandcamp, Google Play, Soundcloud, all minorities that can only compete between themselves. Same for UA-cam (NicoVideo, Vimeo, Dailymotion, Weibo...). Same for Google (Bing, Yahoo, iOS in case of Android, and btw Apple is losing market share). Even SpaceX. Be the pioneer and no one can get you because you are already ahead and you can keep up with yourself through continuous improvement.
This video is 100% spot on. The list at 8:08 of the many ways that governments cause harmful monopolies was particularly insightful.
@gespilk I'm sure you mean well but there is simply no truth to these claims you're making. It is socialism that creates the most extreme wealth concentrations, we see this in countries all over the world. Essentially no one is poor in a free market because money is easy to make and keep and jobs are always available. "Competition is unsustainable" means nothing. Competition in a free market is always relentless without the government protecting the corporations like socialism does.
@gespilk It's not wrong, just use your head for a minute. Do you know why Amazon and Facebook and Walmart and Google make so much money for their investors? It's largely because of government. Government protects them from competition and provides them favoritism it does not grant to competitors.
@gespilk A free market is simply economic freedom. So you're saying that when everyone has the freedom to choose how to spend their own money, somehow it all ends up in the hands of a few people. That's not what happens at all. Under socialism, the government spends your money and they invariably channel it all to the same people. That's where wealth concentration comes from.
@gespilk So you're saying that if 100 people each have one marble and they keep handing random marbles to random people, somehow 'a few' people will end up holding all the marbles?? Not that that's how an economy works, but you can see how illogical what you're saying is.
@gespilk Not that this has anything to do with an actual economy but just speaking hypothetically, why are you assuming that once someone gives away all their marbles that no one will ever again hand them another in the future?
What a great explanation of dealing with monopolies in free market. Of course, the problem is that free market is still not free.
There is a monopoly in Finland on selling alcohol above 8% alcohol content. All the sale is permited to only one company Alko and they can sell the alcohol at any price they want. It's mostly for "alcoholism reduction" and other bullshit claims... There is also a theory that it limits the alcohol consumption of minors but in reality it doesn't or it leads to minors buying other drugs because they are easier to get a hold of than alcohol.
Shows you that most government policies sound good but have awful consequences.
I have an idea: stop buying poison to drink.
5
good. alcohol is bad
Commenting for algorithm.
2:13 Not if A had saved up assets for the occasion sustaining itself until the predatory pricing was over. This is the exact ideal situation to try this, when you have more capital than your competitors. It is also an example of how it is easier to make money when you have it
@roy arrowood "Predatory pricing" as a model of trading has only ever existed on paper
/watch?v=sFslSdbIUZo
@@backalleyphilosophy4763 if you posted a link I am unable to follow it. I wouldn't try to speak to whether there is historical evidence of predatory pricing I simply haven't spent any time looking into it although I do remember seeing an article accusing Walmart recently. You seem prepared to counter point the traditional beliefs of early monopolies like standard oil etc. Feel free to do so, I would like to hear your perspective. Either way predatory pricing occurring or not is beside the point. I was merely pointing to holes in the presenters arguments. There were many and I thought I should
@@RoyArrowood But your initial argument is untrue. Any investor will support your business if you can sell products at a lower price than your competitor.
It’s absolutely no problem to get a venture funded that is promising to generate value.
I think predatory pricing might only be an issue if the good or service they're selling isn't a physical product (since under a free market, I don't see why other investors wouldn't buy the low stock to resell it once the monopoly increases price again. The monopolies solution would be to lower price if they find those investors to be a threat to their own profits). They'll be right back at the situation they'd first tried to stop
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Woah this video is such high quality and yet it appears to be the first video on your channel. Thanks for the quality of your content you are such an underrated channel
Good Job!
Greetings from Polska :P
ZUS
Zakład uśmiercania społeczstwa
Henry George wrote Progress and poverty in 1897 and was the inspiration for the monopoly board game. This video doesn't mention where the monopoly comes from which is a monopoly in the land. these days you also get monopolies because of copy write and patents. Check out the work of Henry George to understand why land has been removed from text books.
Well the video mentioned all sorts of regulations in the end. Patents and copyright being one of them.
Why couldn't the competitors in the beginning start back up again?
@@clumsyclicker3199 That's not possible in capital intensive industries
No idea. Maybe because they assume they'll immediately sell their assets to their competitors, but that never actually happens
@@wavyy It is. If you're driven out of a capital-intensive market, you now have a lot of capital you're not using. Most likely you're paying for its maintenance, or having its value decreasing. You're not just having that lay around, you want to sell it! If no one wants to buy it, lower the price! When an upoming entrepreneur wants to get into that market, they now have a lowered cost for the necessary capital to do so.
It's definitely HARDER in capital-intensive industries, but it still works.
Do a video in intellectual property
Government regulation actually causes monopolies because more regulation makes it harder for smaller companies to begin and compete with the bigger companies.
In nearly every criticism I encounter of capitalism, the counterargument is always "competition".
You’ve earned a sub, great video!
This video deserves way more views
I'm on board with free markets, but this defense misses important points.
1) In the price gouging example, you assumed that competitors could buy the discounted products and resell them. But the big company could impose limits on how many items one person can buy, making it not practical for competitor to buy all products at low prices.
2) This did not address network effects, such as seen in phone companies or social networks, such are Facebook or UA-cam. When everyone is using one network, switching is useless, because all the people are on the original network.
1) That is only going to harm the company trying to predatorily outcompete their competitors. A lot of counters to the example usually miss the fact that markets are incredibly volatile, and such a competitor would have to face newcomers to the market as well, those that can operate at lower costs without lowering quality or quantity. Competitors can also just straight up buy portions of the competition, if they are a company with stocks in the stock market, and this can go both ways.
2) MySpace, AOL, Yahoo, and so on were all once said to be monopolies, and now they have faded into irrelevance. People switched then, and people are switching now, and will continue to do so. The question is of whether we can get competition that can provide an equal or better service than the current status, and whether they can market it well enough. That is a different question entirely, one that can only be addressed by the market, as government intervention would directly harm these smaller companies due to making it severely more difficult to set up. Especially when it is so easy to label anything large a "monopoly".
What about property monopolies?? In Edinburgh a bunch of hedge funds bought up the majority of the flats in the center of the city. They hiked up the prices across the board because the choice was now pay more or live on the outskirts, No competing flats at a lower price. no space to build more.
I'm not trying to start an argument here this is genuine question
+minispike0000 well, the outskirts are the competition in this case. The reason they could hike prices is that there are still people willing to pay that much. And please remember, that this is not a free market economy. We may suspect, that the hedge funds get some kind of special treatment from the gov. But I don't know if this is the case, so let's say it's worth checking
minispike0000
Case will end up likely this as mentioned, they will choose to live outskirts and if there are people dwelling in outskirts, transportation must be provided fır them. Hence, we will end up with a situation commuting to outskirts efficiently. Don't forget this, if there is no customers, there is no distinct Divergence between whether you offer a product or not. Edinburgh's citizens will be encountering this fact.
if people don't have enough to buy, it doesn't matter what price they set it. people will just live somewhere else. goodluck to those greedy people paying the property tax
@@EconClips the problem is that it doesn't stop expanding
Government raises prices of housing. Look at big cities like San Fransisco, Los Angeles, etc. Prices are overwhelmingly high due to the endless taxes regulations and fees, which also makes California the most expensive state in America. Government makes it far harder for consumers than any free market business would.
It’s striking to me that people still believe low price & higher quality are the only factors when it comes to customers making the purchasing decision. Marketing has a HUGE influence over consumers. A product can be overly priced and of poor quality but can still be solid hand over fist due to marketing. And startup competitors often cannot match the marketing spend of the big boys. Additionally monopolies can erect barriers to entry which prevent potential competitors bringing low priced or higher quality products to market. In an unregulated market a website like Amazon could also be an ISP and put tolls in front of all competitor e-commerce website. No matter how much better the competitor is, the tolls they would have to pay or the subsequent slow connect that would result from not paying the toll would reduce or eliminate any hope they had at taking on Amazon.
I love markets, but it’s important to remember that they do indeed tend toward monopoly (even if that producer doesn’t have the best quality or prices), and despite how this video would like to frame it, once a monopoly is establish it can do loads of stuff to eliminate competitive threats. Given all of this we need to pair our markets with regulations to ensure competition.
There are three factors at play that cannot be ignored. Startup costs, which tend to increase as industries modernize, making entry into a market more difficult for new competitors, thus un-freeing the market. Network effects, which are common in natural monopolies and big tech, where the more monopolized the industry is the less demand there is for competition. Scale, where larger firms can more efficiently produce products than any new competitor, permanently pricing out their competition. These are three inescapably real features of our world that prevent the free market from existing.
You really don’t know how the free market works do you.
@@EmperorofChinaItwillgrowlarger
What a serious response. Just assume monopolies won’t/can’t exist based on the presupposition of open entry barriers
@@L154N4LG4IB First of all, things actually get cheaper, not the other way around. Although video games are getting more expensive, the truth is that the industry has become more open to a wide array of creators because it is becoming cheaper to make. This is true for all industries. Second, how the heck can the more monopolized the industry, the less demand for competition. When there were more competitive streaming services for the user to use, the consumers were demanding less competition. The second reasoning doesn’t add up at all. Lastly, although larger firms could produce more products than their competitors, the ultimate judge is going to be the prices and demand of a certain product. If the items from a large firm feels too expensive, then there will be a firm that would have a cheaper alternative. Also, big firms with a more expensive prices would have a severe misallocation of factors they would have to account for since nobody can afford a thing they find to be very expensive, causing bankruptcy. Ultimately, it’s the consumers who choose which competitors a given industry has, not the other way around. This comments is severely misinformed and I hope that this person could learn a thing or two more. If you want a deeper explanation why monopolies can’t exist, I suggest checking out Liquid Zulu’s video on Natural Monopolies and MRH’s videos on debunking every anti-capitalist argument, which has a segment dedicated to monopolies.
@@EmperorofChinaItwillgrowlargerbro facts lol
1. Increased startup costs are a result of government regulation and compliance, not technology.
2. and 3. If a business is forced to charge reasonable prices at a low margin to remain competitive then it is, definitionally, not a monopoly.
Hence why government is a monopoly, since they can charge you for services arbitrarily, and private businesses in a free market cannot be.
The most important issue here is whether we should keep referring to pitiful collections of axioms, assumptions, unreasoned conclusions, lies and verbalism - all with no data or a real-life example - like the one above as "economics" or as "a modern approach to parody that can revive the genre". In any case, following the arguments of a free-market economist for a couple of minutes can really challenge one's rejection of fortunetelling or astrology. As for the good people convinced by this irrational monologue of the improbability monopolies and trusts ever to exist in a free-market economy, I propose you make a quick search for luxotica, the number of car manufacturers over time, the companies that control the food market, and so on. Νeoliberal policies and market monopolization are inherent to one another. In fact, any evidence relative to the matter you'll ever find will only back this statement. The video narration of the "theory", here, is pathetic: Right after the narrator tries to convince us that monopolies don't exist in a free-market, he argues that -ok- even they do, it's a good thing! LOL. Anyway, enough said, I'm off to my next startup that will challenge the monopoly of amazon. ops, sorry, no monopolies exist, damned
Where is the video wrong?
Amazon is not a monopoly lol
This video assumes quite a bit.
Lets take amazon for example, how long would it take for someone to create the logistics centers and warehouses that amazon has now, also where would anyone even get that kind of capital to be able to initially start the company.
It comes down to access to capital and time, a poor person cant start a company to compete with amazon no matter what they do, and even if they did amazon would just use predatory pricing to make them go bankrupt, then go back to being a monopoly. Then the 2 years or so it would take the next person to try again, they would recoup the costs of their debt, and do it all over again.
Walmart, BestBuy etc are competing with Amazon aggressively.
@@saif-al-islam Except they aren't doing a very good job at it. They're competiting to survive because Amazon has already taken a substantial part of their market share.
@Nlex But arguably the reason you can get that stuff so cheap is because of predatory pricing. It's no secret that amazon loses money on its retail operation. They purposely do it to gain market share, aka the textbook definition of predatory pricing in order to create a monopoly.
@@jayit6851 This is completely ignoring the disgusting amounts of subsidization that Amazon receives from the USPS.
Walmart and bestbuy are also huge corporations that don't have your best interest at heart.
What happened if the monopolistic company acquire huge no of resources and achieve a scale of economic for production and then prevent others competitor to enter in the market and then increase the price ?
Their resources would bleed dry rather quickly.
this theory assumes that everyone knows what the cheapest product is, which lasts the longest, which is of the best quality and that people in general know what is best for them. it assumes people are rational, that politics is natural and that there is no possibilty of corruption or lobbying or misinformation in general. In this worldview a person can not mislead another and can not be mislead by another and that is just COMPLETELY ignorant of how life works.
i have spoken:)
+Paulo X people are rational in satisfying their needs, even if for the third party it may seem the are not. The movie is about free market, which we don't have. Lobbying and corruption is of course a problem, but it is a problem because the governments have the power to regulate the economy. About cheating and misleading - free market does not mean absence of the law.
Paulo X As an economics student Paulo is right. Asymmetric information. Classic examples are Car Dealership and Energy Companies. A completely free market is a theoretical model - not a true representation of society or how humans actually behave. That’s why a lot of work is being made on behavioural economics to study this phenomenon. Nudge theory in particular is very interesting.
ScapeNation If you make a consensual agreement to purchase a car for an agreed upon value at a car dealership then I wouldn’t think there’s anything wrong with that. If the buyer decided not to research the value of the car, then they can easily be ripped off to which that would be their fault for agreeing to the price. At a car dealership they’re free to bargain the price and there’s not much room for that if in this age you have trade in value statistics such as Kelley Blue Book that prices a car based on market. In the end the real ones who set the prices are the manufacturers of the cars anyway because it has a set starting price and it will devalue over time with normal wear and tear as well as accumulated mileage. The cheaper the cost to make the car, the cheaper the price it can be sold for and thus the cheaper dealerships will have to sell cars for.
Nudge theory I believe works very well in a capitalist economy. There are really only 2 behaviors a human can have when running a business.
1. Be generous and pay as much as you can to your workers.
2 Maximize your own profit. You may even call this greed if you’d like.
If you give incentive to the doctor (nudge theory) to maximize their profits then it’s easy to see that they will. They will want to expand their business to supply the demand because they want to maximize profits and in order to do so they must hire more people. That also creates more jobs which is a bonus beneficiary to the aim. If you don’t pay those workers at a reasonable price, then it gives those people an incentive to quit and walk down the street to the competing clinic and work for them instead because they pay more and it turns out the workers also want to maximize their profits. It also gives incentive to the 2 clinics to become better clinics because they are competing with each other so therefore they will both find ways to provide top quality service and seek top quality treatment methods.
LASIK Eye Surgery is a great example of why Capitalism works. Insurance does not cover the costs and it’s up to the providers to set the price. As soon as the innovation was made public, we saw an increase in ophthalmologists and thus began the competition for LASIK pricing which has gone down by over 50% since it got started and has still continued to go down.
Proponents of a market based economy rely less on theory and more on data especially when we have such vast access to information today. If a surgeon performed 10000 surgeries and 5000 of those were unsuccessful, then nobody is going to want to take a 50% risk and the surgeon will go out of business. In fact, they wouldn’t even be allowed to begin performing such procedures until their medical devices and procedure have been regulated in phase trials by the FDA. So there is still law in place and data must be submitted that can freely be accessed by anybody. Including additional laws that would take a product off the market if dangerous effects are identified. A brand of eggs this year was recalled (millions of eggs) because they were able to link around 35 sudden cases of salmonella to the brand further supporting that laws still govern a market. I’ll add that they detected that very quickly considering this was across the span of several states to which word got out to and received plenty of news coverage over the internet and tv as well.
@@EconClips Someone really needs to tell you the condition the US was in before Roosevelt climbed to power, with constant worker strikes.
Lobbying and bribing was KEY back then to maintaining their monopolies.
@@javierititin but he has a point, why was loobying and bribing so powerfull? because goverment has a lot of power to maintain that monopoly. If the goberment did not had that power the bride would have been useless.
Bad monopolies can exist; HOWEVER, it is either temporary or will create a better product.
I know this may be somewhat off topic but how do we tackle the problem of someones worth on the market being so little that they themselves can’t afford proper housing, food, and other necessities?
ultimately, regulation... With total free market, monopoly happens and working class just die. Not even need to be a leftist to recognize that.
@@dieglhixThat is the dumbest thing I have ever heard
@@EmperorofChinaItwillgrowlargerthen say something better smart guy. i’ll wait
That's the best part: we don't!
How do you explain Rockefeller and Standard Oil? It was a permanent monopoly that had to be forcibly broken up by the Sherman Anti Trust Act
Are you talking about the monopoly that only controlled 66 percent of the market at its height
Rockefeller gained his market share by providing a superior product at a superior price.
His competitors funded a propaganda campaign against him for it.
I would agree. If people truely want to end monopolies the only way to do it is to get rid of regulations. And allow people to compete again.
Rockefeller created insanely low prices. Before them, only the rich had oil light - whale oil. But after, they lowered the price of oil so much that the average man could finally afford oil light in their houses.
Please keep it up, your videos are really informative
Monopoly is possible in cronyism
Or even in demand side economics
And in Socialism it's obviously the monopoly!
Free market is sole fighter of monopoly
"This kind of monopoly is not harmful"
Google CEO: Laughs in 1984
Big tech companies hold monopolies now because of the insane amount of IP patents that protect them from anyone else making any sort of competition. Plus they have bought off a lot of people who make up the anti trust commitees. Bigger government is never the answer.
@@MrJabbothehut so...basically what China is currently doing with IP theft, you'd like to allow globally through disallowing IP protections?
@@alexcrosby that's not exactly what I meant. Ip in terms of branding should be protected. What shouldnt be protected however is every single invention or new way of doing something under the sun. For example amazon has a patent on the 'one click' feature on their ordering process. Facebook has up to 2000 patents. People will tend to buy a brand due to the marketing, reputation, and price of the product, not due to the inticancies of the technology itself.
@@alexcrosby what a good comeback. "X is flawed" "so you're saying we need to get rid of X"
No; they're saying X is flawed. Lmfao you can't just strawman and expect to make a valid point what the hell hahaha
@@MrJabbothehut Nope, they hold monopolies because of network effects. You don't want to join a social network that is used by no one. You want to join one that is used by your friends too.
What about the electric company? Can you imagine other companies putting up multiple electric poles?
If your electricity company charges unreasonably high amount because they think they are monopoly, it could make sense for every house in your neighborhood to switch to a small gas generators or something similar (same thing with if your water bill is too high your dig your own well). Worst case everyone in your region moves to a new place for cheaper electricity and your current electricity company will go bankrupt because no one will use their service. There's always alternative in a PERFECTLY FREE market.
Sure I see people right now with their shovels digging wells and hitting gas lines and blowing themselves up.
@@yagotta1 And actual professional diggers will see the opportunity and start offering the service for profit
Raffaele Mancini Nah people are too cheap to pay for professional diggers
@@yagotta1 Well the monopoly electricity/water company too knows that people are cheap, and that's why they will not increase price indefinitely knowing that over a certain price point people will get creative and stop using their services
One thing that isn't mentioned is how government intervention and loopholes make it completely possible for one company to pay 1% effective sales tax and another one 20%, meaning more profit or lower prices for the customers, meaning an unnatural advantage. And next to that advantage they are more likely to get bailed out in case of crisis.
Germany is a great example of a nation degenerating mainly based on this kind of economy.
3:10 If there are government tariffs on foreign goods this isn't as easy to do.
Exactly. But government tariffs are interventions, not free market.
The gov putting up the tariffs will only hurt their economies in the long run, as the company exporting goods will simply go to another country with lower tariffs
Good job, very well!
I agree with most of it. But not with the part of natural monopolies. For instance, if the water company abuses of its position, it would not be practical for another company to duplicate the water pipe network. If you have 2 companies sharing the market the prices would tend to be higher because you would have 2 networks to maintain that would be used below their capacities.
For utilities, providers and customers would usually sign contract agreements so the provider can't simply change price/service at whim.
In a perfectly free market, if water company abuses it's position you dig your own well or move to a place where the local water company doesn't abuse it's power. If the prices are too high because only 2 companies are sharing the market, a third company will come in to steal market share by offering lower price. It's only possible for the 2 companies to share the market forever is when the government comes in to block the 3rd company and destroys the free market, which happens all the time of course.
what happens if the particular market has high start up costs? Eg. utilities infrastructure. Then if a company does start dumping and gets rid of its competitors, will new businesses not start up since it costs too much leading to a natural monopoly?
5:44
Thanks and good job... That is all I have to say m8.
I have to disagree. Yes if a monopoly is bad enough change is still possible, but with huge cost, so a regulated monopoly can be cheaper.
The State itself is also a monopoly somehow yes there is still possible to rebel but with cost.
Private entrepreneurs are the ones who take up this cost, of their own free will, because they know that it's possible that their investment could pay off exponentially if they are able to seize part of the monopoly's market share.
Usually a "regulated" monopoly simply involves the State using violence (regulations) to keep competitors from entering the market and breaking the monopoly.
@@hrovardran4755 It is hard to admit, but yes, for the most part, you are right. The state is very bad at what he does.
The stat abuses its power.
And here, where I am located (CH), we have many rules in place which explicitly prohibit competition or make it very hard.
Most notable is public transport.
Still, for example, power grid, water pipes, it is n very hard under normal conditions to be competitive.
I am Se Uri
In theory it is this way but in practice things never go so smoothly. if there was absolutely no economic policy and 100% free market with no rules, then whats to stop me from doing highly efficient neuromarketing, or from providing credit for diverse reasons with insane interest rates to dumb people that would accept it? for example Forex companies with no licence that cleverly bypassed laws to push their "service" and convince people that this was a good idea when in reality people ended up trusting them and losing life savings to a point where some committed suicide. so to what extent do you not regulate to protect the people basically from their own stupidity? or is the argument here that the free market also acts as a sort of economic savvy natural selection filter? could be but seems kind of cruel.
This isn't even an issue. In a free society people have to be free to put their life savings (or their life) at risk. No one can judge the value of that risk.
Family lines that teach their kids caution and skepticism and critical thinking will flourish and others may not. Freedom is not cruel. It is government control that is cruel.
Your forex example seems to be one side of spectrum. What about the other side where a forex company with no license does have the 'know how' to create wealth for its clients, but doesnt have time/money/resources to get a license, probably because of it being small? In this case this company could create several millionaires who will most like spend more and increase wealth and economy. In a free market, you could be in either side of the spectrum, while in a regulated system, you dont have this option to choose. It seems like at the end of the day government regulating such matters would work if they knew what they were doing, but it seems like in practice this doesnt happen.
Like you said there will be a lot of individuals who make poor decisions, and I think the government should advise instead of regulate, but a free market is self regulating, a scamy forex company wont be in business for long as people would start vouching against it which seems like a bad long term business model. The incentive to run a proper business that provides value to customers seems stronger.
I love this channel!!!
To laugh at it?
I wish all of the video would come up but I was going to say monopolies are bad when it drives other markets away and now the sole company drives prices and you the consumer have no way of fighting against it. Like how Wal-Mart would open business and sell the same goods and services in a local community which would lower prices that consumers stop buying from the mom and pop places and then it caused those business to go bankrupt. Some monopolies are necessary though like our electricity and water and making sure the price is affordable for most people who live in the community because not everyone wants to have telephone lines going over their property and such.
Sounds good on paper but the world is much more complicated & doesn't work that way. No easy solutions in the real world, only messy ones
But what about land? It's inherently monopolistic competition and effects every other market.
Great insight
I think the revolution bought in by reliance jio in India is a fine example of monopoly in a free market
This is oversimplified and forgets about supply chain, violence, and the fact that starting capital is not as easy to get as you expect. If you have diversified assets, you can completely break the system, and literally kill your competition.
Your argument is a bit to oversimplified what have violence to do with competition what did you mean with that? Second you say something about supply chain but what has this to do will supply chain for smaller companies will increase the price for a product about 200% like in the video the price did go up about 200% and i am sure that supply chain can't inrease price that much.You must show proof that supply chain cost less for big companies on making these argument.If it does then the whole alcohol industry would be monopolist today but it is not.My third point is that it would be very easy to get a investor for a monopolist market the prices increase the for alcohol about 200% with less quality many investors would be interested in your company because you can produce for 200% less with better quality so you would get all the contracts from the supermarkets and would easily compete on the market.
What's stopping a company from a gaining sufficient amount of wealth to engage in predatory pricing practices on the international level? Or crushing startups with other anti-competition tactics? Surely a monopoly with enough money has plenty of ways to crush startups, even if they buy assets from bankrupted competitors.
This video seems incredibly optimistic and is making the assumption that all industries have meaningful alternatives. In the U.S., trains and planes are not a valid replacement for cars and roads.
"Government intervention causes harmful monopolies"
This sounds... baseless. And untrue.
IAN 4000 Posting a comment to see if you get any response.
" "Government intervention causes harmful monopolies"
This sounds... baseless. And untrue."
If you don't like evidence then I'm not even going to speak with you.
I don't care how much money they have, if they're engaging in predatory pricing, their fall is guaranteed. As soon as they're out of money, they're done. People seem to think that business owners are all-powerful gods who can command minions at a whim. That's not how businesses work in a free society. But that is how government works.
Why should we put more trust in political self-interest than economic self-interest?
Stephen Kendall "their fall is guaranteed"
Is that why Wal-Mart and Amazon still exist? They are both known for predatory pricing.
en.wikipedia.org/wiki/Predatory_pricing
Stephen Kendall Business owners aren't all-powerful, but corporation leaders are extremely powerful. That's not even mentioning Mafia leaders, which have existed even without government.
See: History "Post-feudal Sicily" section.
en.wikipedia.org/wiki/Sicilian_Mafia
It was considered to be in response to a *lack of government* that the mafia came about in Sicily.
Actually, when you say that monopoly can « theorically » arise in the free market, this is false. Your error is to only comparing the market of alcohol, but why so ? Customers also use their money for a lot of others things. When a customer buy something, it means that he also choose to NOT buy something. If I buy a book, this money isn't earned by the alcohol industry. So actually, in the free market, every commerce is competing with each other. Don't believe me ? See Amazon, for example. In the beginning, they were only selling Books, now they sell everything (to minimise the competition).
Free the markets! 🙌🏻
This video is not historically accurate at all. The Standard Oil monopoly formed by keeping their shares private and simply undercutting competitors. They also made shipping contract deals with railroads to ship their oil at cheaper price than competitor oil by agreeing to ship all their oil through a specific railroad. They essentially became vertically integrated. The reason vertical integration is illegal is because IT LEAD TO DOZENS OF MONOPOLIES IN THE UNITED STATES IN THE LATE 19th CENTURY. Monopolies are a naturally forming occurrence in an unregulated free market. Look up the “South Improvement Company” for further information on its original formation. It’s a textbook case of how to create a monopoly. Now we have oil, telecom, internet service providers, jewelry manufacture that are all monopolies.
it was expensive to import stuff in victorian era
Your comment section is not free market because you give hearts to specific comments. Smh.
What about artificial monoplies? One owner can dump because he makes money on other products. So he has the advantage over a start up because all he has to do is break even for one product and profit on shares or stocks of another product or company.
Then it’s not harmful and there’s no problem.
EconClips exactly,I think you should have ended this nice video with “monopoly under a free market should not exist”. Also replace nationalisation for privatisation.Finally cheaper and better is mostly a marketing strategy more than anything else as companies strive for increasing profits to stay relevant and gain leverage over competitors. Regardless, I believe that in the long run a reputable and reliable company with good customer service could justify its premium. Monopoly is in its core the economical cancer plagued upon humanity. More support is needed for small and medium business to compete but if that support comes at the cost of higher taxes and more lending than it just digs the hole deeper.I see the overpopulation,depletion of resources and monopoly of what is left as humanity domesday.Currently 90% of the population is born and dies on their knees with both hands tied behind their backs,crippled by the weight of inequality and debt. I see the overpopulation,depletion of resources and monopoly of what is left as humanity domesday. And even if we manage to find life in other planets across the universe we will still continue as simply commodities in the economic game of power. Good video.
If all companies owned each other's stock, then they would essentially become one company, hence cartels. And what's to stop the cartel from buying out would be competitors?
Addressed at 6:43. 1) Competitors have a dis-incentive to sell their company to the cartel and 2) members of the cartel have a huge economic incentive to break from the cartel, lower prices and capture a much larger market share. This is why in all of history it never sustainably happens without government meddling.
If you try to buy every competitor that pops us, you encourage even more people to start new ones. The supply of startups becomes infinite and the cartel runs out of cash.
Private ownership instead of stock-based public ownership.
@@nowheretosit ok but what if the cartel had enough capital to drive prices down below that of the splinter company? surely being part of the oligarchy would be preferable? and how are competitors dis-incentveised to sell? everyone has their price, its just if the monopoly can afford to yet
Smi- 1) For as long as the cartel has prices artificially low, they are not a harmful monopoly. They are a beneficial monopoly. But the moment they raise prices to be harmful they will will be overwhelmed by competition again. Competition is so relentless is a free market you can not maintain a harmful monopoly except with government help.
2) I'm the cartel. You're the upstart. You know that everyone in the cartel is forced by agreement to have a fixed price. This is the best time in the world for you to be in business. You can set your price lower than the cartel and make a windfall. When then cartel wants to buy is exactly when you want to be in business against them.
3) Everyone has their price? If the cartel offers market value to buy out competitors, most will not sell. The cartel has to offer higher than market value to have any chance of buying up all their competitors. Each remaining competitor will ask for more and more money. This huge supply of purchasing cash will attract more upstarts who demand even more money. Like Ray says, the supply of competition that needs to be bought out will be infinite.
Ask yourself why all the big companies of the world all support big government? Is it because the government protects the people from these predatory companies or is it because the government protects these companies from competition and allows them to maintain a monopoly?
If you have usury then the usurers end up owning all the stuff and anything they immorally want from people and small children as payment for the debts. That is monopoly.
cartelization destroys the companies in the cartel and theri competitor becomes a short term monopoly :)
and then other companies enter the market and we end up where we started but with increased innovation
my teacher was teaching us that businessesman can create monopoly and was using that argument that u debunked at the start of the video. ty for video
There is no way to separate the economy from politics. The capitalists will always find a way to influence the political system. In the US, for example, the vast majority of democrats and repiblicans are funded by corporations (which also eliminates "competition" in the political arena - they can't be beaten by any politician who is not heavily funded by them), and accordingly promote laws in favor of the big corporations.
There is no such thing as a "free market" - it destroys itself.
What about internet in the UA? A couple of companies devided the whole country and offer bad service for high price.
This argument is based on them being equal, but in reality they are never equal, they all have different circumstances, even a smart strategy will eliminate competition, let alone luck, etc.
Also, prices are not the only way to eliminate competition.
Problem is monopolies have more resources for everything - they can afford to have bigger budget on marketing, they can influence customers, create brands, sue competitors, extort them in any legal or illegal way.
Cartelization was illegal) In "free market" this is very simple road to classical monopoly.
This theory for children or braindead assumes perfect distribution of information, perfect rationality of people, perfect market forces, that dominate any other forces. Free market is a first step to absolute tyranny.
"A smart strategy, let alone luck" You're missing the point of the video. In a free market, a company must offer two things to exist as a monopoly: lower prices and better quality. Indeed prices are not enough, quality must be equal or better than its competitors. In which case, if it manages to out do its competitors on both, the customers benefit. If the company then decides to increase prices, or lower quality, a new competitor will rise out of demand. The reasoning you use "in reality they are never equal, they all have different circumstances" is exactly why monopolies have never existed in a free market.
You're assuming in your argument that a rich monopoly will buy out poorer companies trying to compete, but you're missing the fact that even if a company manages to monopolize one good or service, it does not mean that it is the only company with a lot of wealth available to it. Other companies, which have little to no involvement in that market, will become interested and invest their capital/resources into offering a better good/service if they perceive a demand for it. Keeping up with the monopoly, through the use of the measures you mentioned, becomes a drain on the monopolies resources. Of course, you mentioned law suits, which would not exist in a free market with the exception of tort liability, so that we can discount from your argument out right. In a free market the possibilities are limitless, there are too many factors for the monopolist to consider, infinite factors in fact. The best a company can do is compete.
@@fernandomarturet2486
A monopoly doesn't need either lower prices or higher quality to exist. It can drive competitors out of business through simply spending more money advertising it's product.
And I don't even have to focus on that to be against free-market economies. CHILD LABOR would be everywhere in a free market, if you don't see that as a problem then you have problems of your own.
@@CrazyWeeMonkeyAre you stupid
I forgot that step in nazi Germany when they made the markets free. Oh that's right, they didn't. They took government control of the markets because they were na-zis, national socialists
I -
I am very late seeming this came out years ago but WHAT!
You can give scenarios saying in such and such scenarios the free market will contradictory to belief stop monopolies.
Yet monopolies did exist in free markets thus you must be hiding something because surely when there was a free market in America before the anti trust laws there shouldn't have been monopolies but damn there was because they grew slowly bought out the competition until eventually there was no one major left and the companies could then stop other companies from competing by buying out more companies or price dumping in areas with new competition with higher prices elsewhere.
Please do not skip around case studies next time please and please don't pretend the scenarios you give are the only possible way for someone to try form a monopoly in a free market
OPEC won't work long term than
But there are few business that own meny companies like nastle.
At their size they must be lobbying for privileges on the market.
this is an awesome video
Can someone to me explain how B, C and D buying A's stocks prevents the monopoly? Henry Dow bought a bunch of the price-dumped oil from the german cartel, but I don't see how that's the same as buying it's stocks..
I guess it assumes that the dividend payments will bring them the lost revenue. Essentially the profit A makes for it's shareholders will partly be given to his competitiors B, C and D, which means their loss in revenue and thus profits isn't that bad, so they can hold out longer.
Maybe he meant the kind of stock that is the number of goods in stock.
Good job ,
Can you do a video about the Reliance jio in India, which is likely to monopoly the Indian mobile services market.
in my area Comcast has a monopoly on internet sevice... how do we stop companies like that? they are the only company offering high speed internet where i live and they set their prices very high. Verizon is the only " competitor"... but they are not allowed to bring fios to our area, making it a terrible product. how is that fair?
Allowed implies that there is government intervention which in a very brief sense destroys the idea of a true free market
This is an odd situation where cable and internet companies run like cartels an have specific regions of "territory" realy the only reason this is possible is with cable requing so much infrastructure. So I dont know how to deal with this.
You missed the #1 way companies monopolize -- buy out the competition, to include fledgling startups that pose a future risk or have an innovative way of doing things.
First of all my friend monopoly comes from Greek word mono(single) polo (sell)..so monopoly doesn't exist in modern days.maybe only in North Korea where the government owns everything.
I read the Dow's story, it is interesting tactic. I am not sure if it will always work. If company A can sell above profit margin and competitor can't follow if they are smaller. Also, why would anyone buy from B, C, D if A has the lowest price.
Choosing train or plane is not always an option if your city, or the destination, does not have that kind of connection. And monopolised alternatives will also be expensive. Bottled water is much more expensive than tap. And you can't bathe in bottled water. And not everyone can dig a well. Building double infrastructure does not make any sense, as you also mentioned, and the price rise that to be an option is probably extreme.
The cartel will send goons rather than go bankrupt because of a small factory. If police intervene they can pay them. Or they can buy them, or lower the prices as in first example.
Government should prevent monopolies, but also not create one
They are the biggest monopoly out there
Rockefeller laughing in capitalism
mises.org/library/100-years-myths-about-standard-oil
@@Krisu_03 thx
In free market only oligarchs is possible but still can ruin the so called "free market" if they joined force then buying laws and officials!
Only by the use of pre-existing monopolies.
Which you ask?
Currencies. They have a flaw. The zero lower bound. This turns them into a monopoly, once it piles up under private control (the 0.1%).
4:30
You're assuming that a) the product is relatively easy to produce (since if you didn't know how to produce it, you'd not be able to restart competition once the monopolist starts abusing their position) and/or that b) the product is replaceable with similar products.
These assumtions won't always hold true: Computer chips are hard to produce so it's hard for outsiders to enter the market (that'd be the case even without patent protections). Computer chips are also hard to replace with alternatives, since there are many things you just need these for. Also, there are markets where being a monopoly makes it by definition basically impossible to lose, like instant messengers. If nobody uses my new instant messenger but everyone uses WhatsApp, then nobody will try my new instant messenger (even if it's better than WhatsApp) since they can't use it to chat with their contacts who use WhatsApp. WhatsApp however will become even more ubiquitous as people expect you to use it. Similar deal with learning-based programs: the more data a service has, the better the service will become. So a large service (like Google Search or UA-cam) will grow faster than a small one ever could.
i have brainrot now thank you
What an elegant proof that monopolies are not possible in a "free market!!!!!" NOW, can you give an example of an actually existing FREE MARKET?!?!?!?
3 people on an island
Now i understand why google and apple are not monopolies.. Because although they have the boggets market share, no one prefer the competition, because they are sumply better, and even when they are much more expensive, people mostly don't want to use the other ones
The cpu monopoly? There are only 2 cpu makers, one is intel other is amd.
What if intel make amd go bankrupt and then have monopoly. selling cpus for $2500 each.
every computer, phone, tv needs cpu. And it is too expensive for someone to start making new cpu company because the starting upfront cost is waaay to much. And we need computers for healthcare , police, everything.
how to solve this?
Well If there is a big enough demand , then people would invest alot in a new cpu company.
And If no one buys their CPUs for 2500 dollar they would need to lower their prices
Both Intel and AMD have patents and IP
There are more than two CPU makers, it's just that people keeping on wanting x86 in the year 2020.
What about the banking monopoly?
There isn't one, only the central (government) banks, which have nothing to do with capitalism.
@@R3tr0v1ru5there is more than one type of monopoly in this case the concentration of credit rather than democratization
@@DistributistHound Explain how that is possible in a truly free market.
@@R3tr0v1ru5 a truly free market would not allow to one firm to interfere with the freedom of other firm. Then it depends on the concept of money we have and the rol of banking in this free market, if banks merely safekeep the money it is only a matter of hoarding deposits, if we treat fiatmoney as a commodity then we have a different understanding on money
'Natural monopoly' not 'government mandated monopoly'.
wtf you are saying that people would buy bottled water for extortionate prices or build a really expensive well over the extortionate prices of the water companies? Either way the consumer is getting royally fucked!
If enough people stop buying water then the company would collapse. In Poland the goverment has 100% monopoly on water infrastructure so yes, we'd be getting royally fucked.
2:26 Three new companies will have a hard time "popping up" if company A purchased b, c, and d's old factories with the express intent of prohibiting others from entering the market.
So company A lost a lot of money because of dumping AND bought the other companies? I think company A will have a harder time with all that debt
@@klmklm16 I replied to this video 4 times with different criticisms. This is the fourth. If you find the others and read them this makes more sense but basically company A does not have to take on debt.
This video ignores the most basic way monopolies begin which is simply by being able to produce more of a given good. The more of a given good you can produce the cheaper it can be produced per unit. This enables the company to sell it cheaper, eliminating competition who simply cannot lower prices that much. This is how monopolies are commonplace in free market economies. He didn't say anything about mergers and how relevant they are to the substitutes in the market. If one company owns the the substitutes, are the really substitutes? He mentioned at the beginning of the video that companies could engage in predatory pricing, but seems to forget later. He mentions something about smaller companies buying the stock of the bigger one. Maybe he knows more about stocks than me, but I would think if smaller companies started buying Apple stock, Apple would be very happy about it, and become bigger. Also, he seems to think airplanes are a substitute for roads, which is weird and wrong. And wells are a substitute for water bottles, was that what he said? Also weird. He mentioned the brilliant economist Murray Rothbard. My comment can only be so long but just look him up folks, because he's not so brilliant.
You don't have to worry about monopolies in a free market.
mises.org/library/myth-natural-monopoly
1:43 Not if A is a private company, not publicly traded
That is exactly correct Roy. Most monopolies form through private companies and private equity where outside investors may not buy shares. The Dow example is valid, however, there are hundreds of other monopolies that formed through private companies.
Name one example of a natural monopoly which has ever formed.
Just read my other comment on this video and you can see several examples of natural monopolies forming. These monopolies were able to form without any government assistance. They didn’t even get tax breaks because there were no taxes on corporate profits in the 1870’s.
@@spencerh1813 you can ctrl plus c your own comments and show your arguments what a lazy ass :D
Yeah but Bernie Sanders....
monopolies do happen in free markets.
team fortress 2 is its own subgenre and does not have a single competitor anywhere in the gaming industry.
It's just an arena shooter
@@SCHMALLZZZ
1) none of its game modes qualifies as an "arena shooter".
2)when I said that it is its own subgenre I meant that team fortress 2 balances the weapons like no other multyplayer game in the industry.
all the other multyplayer games tend to have extreemely generic weapons.
when making a sidegrade they just change some of the basic stats of the weapon (reload speed, clip size, damage etc) and they call it a day.
team fortress 2 however is the only multyplayer shooter that often adds aditional abilities to the weapons. in some cases it even lets the players use non-weapons in their weapon slots.
for example, in other shooters things can go like this:
here is a shotgun that can shoot up to 5 times with no reload, and it deals so much damage that it can kill with one shot everyone with a headshot in close range.
here is an alternative shotgun that can shoot up to 6 times, it shoots 20% faster but deals less damage meaning that some players may survive the initial shot.
in team fortress 2 weapons can be more creative.
you can replace your original rocket launcher with an other one that heals you whenever you damage an enemy, with the downside that it shoots 3 rockets instead of 4.
you can replace your submachine gun with a bottle of piss that makes the enemies take 35% aditional damage when injured.
you can replace your axe with an other axe that deals aditional damage on burned targets and gives you a speed boost if you kill them.
and more.
there is not a single multyplayer shooting game in the industry that can compare with the creativity of team fortress 2.
@@SCHMALLZZZ
no it is not.
do you even know what that term means?
not a single one of its game modes is an "arena shooter".
this game balances weapons with such way that no other multyplayer game in the industry does.
when making sidegrades the other multyplayer games in the industry just change some basic stats of the weapons(damage, magazine size, firing speed etc) and call it a day.
team fortress 2 however often adds aditional abilities to the side grade weapons and even lets you add non-weapons in your weapon slots.
for example, in other shooters sidegrades are like this:
there is a shotgun that can get an OHKO against anyone with a successfull headshot and can shoot up to 5 times.
the sidegrade of that shotgun can shoot up to 6 times, shoots 20% faster but deals less damage meaning that some people may survive the first headshot.
in team fortress 2 the sidegrades are more like this:
you can replace your rocket launcher with an other rocket launcher that heals you whenever you damage an enemy, and the downside is that it can carry up to 3 rockets instead of 4.
you can replace your submachine gun with a jar of piss that makes opponents take 35% more damage from all sources.
you can replace your axe with an other axe that deals aditional damage against burned targets and gives you a speed boost when you successfully kill someone.
Very sigma video, ty. simga fluf out
My history teacher needs to watch this video...
Mine too...
What about amazon,i mean its not a monopoly but its pretty close at this point
Geez, this guy talks slow. I've got it on 2x and I'm falling asleep.
Same
guys u r so simple and true
Each buyer doesn't have to be perfectly rational in his buying habits. It averages out. If the price is higher, fewer will be sold. If the quality goes down fewer will be sold (in the long run).
👍👍👍👍
Telecoms in the USA have local monopolies without government intervention. Rates keep increasing while their service remains lousy. Competitors bypass areas with existing monopolies.
Uh no they don’t
I agree with everything you said, except that digging wells or buying water bottles are no substitutes for tap water. wells are no garantee for health and water bottles use plastic, harmfull for the envirnoment. I think you are too much biased on the austrian economics view. there are some situations the market won't work, the water supply being one of them.
I just subscribed but you must be high. Not only monopoly is posible, it exists, in all types of economies. It’s the ultimate business goal. Who wants a multinational if not to rule. Who ever has 70% even less of the market share has a monopoly. A true monopoly it’s not to be the only company, but to call the shoots. To be honest, niches are not even considered. If X decides to rise prices 20% and no one blinks its a monopoly. You should be a bit more down to earth and pragmatic.
It does exist, but due to the factors that we've mentioned at the end.
carlos- All the monopolies you're thinking of are specifically caused by government meddling and use of force. Ironically, it's the socialists calling for ever more government that have made possible the monopolies they claim to hate so much. If this isn't ironic enough, the socialists want to make everything a government backed monopoly.
How about in the soda industry with companies like Pepsi and Cola monopolizing the field?
Does they? In my country you can buy many similar products from different producers.
There's plenty of competitors to these brands (here is US.) And like is mentioned in the video, these are not harmful monopolies. We are not being overcharged for pepsi or coke, they are comparable to other soft drinks, if not cheaper.
Your looking at the wrong problem
It's when company's own medicine and they literally work with doctors to proscribe lethal medicine to non lethal injuries.
So US restaurant chains provide better quality for better prices than independent restaurants in Europe, where predatory practices are/were harder to establish due to government control? This video is ridiculous.
_Laughing in 19th century capitalism_
*sits over here luxuriously enjoying the technological benefits the 19th century has brought us.*
@@obviouslykaleb7998 where from a monopoly named Amazon?
Diablito el Demonio
Not only is that the 21st century, I have yet to hear one legitimate complaint about amazon’s service.
@@obviouslykaleb7998 how about from its exploited staff and all the competitors destroyed by preditory pricing this video says is impossible?
@@gartner101 1: Merely having lower prices than the competition does not mean it is “predatory.” It is evident by the fact Amazon is still running that they are not “predatory.”
Two: considering your dubious use of the word “exploited,” I’m assuming I’m about to hear a mixture of “they’re not being paid what they’re worth” and “Jeff bezos is too rich.” The answer to both those statements is simple: the employees joined for the agreed-upon price and can leave any time. COVID’s artificial crisis aside, they can quit as soon as they find a better job.
This doesn’t address a monopoly on a necessity like water.
At the end it does. It's a 'natural' monopoly.
But even then - according to the Chicago School its not a problem either, as they have found out via some real world examples in the US.
They boil it down to government intruding and picking winners (granting monopolies to private interest) which essentially shuts down competition and voila, you get a mess if you're not very very careful.
The more problematic monopolies are the ones where the government is responsible, but no one knows or realizes.
Check out the zero lower bound of currencies. They turn money into a monopoly, once it piles up in private hands.
That's why we go from Capitalism to Cronyism on a regular basis (~50-70 years or so).
The USA is ripe for disruption due to that..
You need to reupload this with a native english speaker.
its not that hard to understand
IN51GHT
It would be a quality of life change. Nobodies swearing off the channel because of it but it would help.
this video would be a lot more convincing if nestle didn’t own half everything you buy in a supermarket
@@chbrules
If you mean alternatives in the plural sense, then each competitor is capping at 25%, or in a more realistic world, the best of the weaker ones is just above 30%. There is no way they can keep up with the marketing machine the one with 50% has.
Also that is is quite the excuse for conglomerates. Control the biggest slice of every market and people won't complain, not even the government. Actually, given the state Mitsubishi is in, making high quality products in so many areas, there is not a single factory, office or home without a Mitsubishi equipment, be it A/C, a pencil or a car. Not just that, they gained so much power over time that today they have blackmailing capabilities over the government, and no, there were no "government interventions", and for many people out there, stop believing every monopoly is a government intervention. Industries are greedy and they know very well how the capitalist world works (yeah they won't make shitty products just for profit, but they can very well control what you buy). Soon, you will see this happen within USA with Disney buying big companies every 3 months. Even if they have only 30% of market share per area, they will soon control what most of us see and we won't even know. "Ah but people will look for alternatives". Exceptions. Tell me if there are equal amounts of people using Spotify and "alternatives". There aren't, legal or illegal. Bandcamp, Google Play, Soundcloud, all minorities that can only compete between themselves. Same for UA-cam (NicoVideo, Vimeo, Dailymotion, Weibo...). Same for Google (Bing, Yahoo, iOS in case of Android, and btw Apple is losing market share). Even SpaceX. Be the pioneer and no one can get you because you are already ahead and you can keep up with yourself through continuous improvement.
Company A may also drive themselves out of buisness.