How many? And of *what* -- Econ 101, over and over again...?

Post #7,511 by CRConrad 9/2/01 6:46:18 PM Reply	How many? And of what -- Econ 101, over and over again...? Addison writes: [Quoting me:] (Now do you see what I mean, about your "blind faith in the Holy Market"...?) I know what you mean. I told you that you were mistaken for combining a blind faith in Holy Corporations and Markets, and attributing it to me. Markets, yes. Corporations, no. Can't say I've seen you explain this distinction you (now claim to) make very much, if at all... But OK, never mind that. I'll concentrate on your main misapprehension below, in stead: And for the nth time - it is my opinion, that IN TIME, that will occur. I'm not sure what books you'd prefer. Oh, say, Econ 102...? (Or 201, or whatever comes the semester after 101 in your numbering system.) That does NOT MEAN you should WAIT FOR IT. (IMO) In other words, you keep presuming (apparently) that my faith here, means that you shouldn't take other steps. No I don't -- that's just you presuming (explicitly) that I do. I'm telling you - in my opinion, based on how things work - that a monopoly will apart because of market pressures. Eventually. Yes, its a theory/belief. I see a lot of support for that. (What do you predicate your denial on?). On guys like Adam Smith[] and Pareto and Ricardo and... Oh, I can't remember them all. In short, on what came AFTER Econ 101. And I KEEP disclaiming this - that antitrust/anti-monopoly legislation is needed, nay, crucial IN THE SHORT TERM, so you don't have to WAIT for the market to take its effect.* I know, I know... And I wish you'd STOP, dammit, because I've NEVER SAID you said it wasn't needed. (At least, that is, I wish that you'd stop going on about this to ME.) What I am actually saying is, it's even MORE necessary than you're acknowledging, because the market actually DOESN'T correct ALL such "errors", in either the short OR the long run. That's what the concepts of "market imperfections" and, more specifically to this case, "natural monopolies", are all about. (And there is* a school of thought, with some good support, that antitrust law like that helps monopolies, but I shan't get into that, the tangents it would introduce... :))* OK, so let's not. []: Side note to Ashton: Yes, the sainted father of economic science, Adam Smith hissveryownself, said the Invisible hand does NOT always work perfectly, and can in fact sometimes lead to (side-side note to Addison: PERMANENT) "market imperfections" such as monopolies. So STOP DISSING THE GUY, willya? Sure, Ayn-Randian Ultra-Libertarian whackos of the "there ARE no 'monopolies', except govertnment-created ones!" stripe (the kind Harris definitely, and Addison to only a slightly lesser degree, either are or are at least coming off as here) often take his name in vain, as a would-be proponent of total Laissez-Faire... But that's not his* fault, and by apparently accepting their characterisation of him, you're only perpetuating what they're doing to his name; which is, as far as I'm concerned, besmirching it. Christian R. Conrad The Man Who Knows Fucking Everything
Post #7,524 by addison 9/2/01 10:59:10 PM Reply	3. Can't say I've seen you explain this distinction you (now claim to) make very much, if at all... But OK, never mind that. Then you're just being insulting, for I replied to you the other day with exactly that distinction on YOUR misconception. It just came UP the other day, when you made it up, and I corrected it. And now you're saying that somehow its my fault for your failure to bother to read it? No, don't never mind that. No I don't -- that's just you presuming (explicitly) that I do. Its the impression that I received. My apologies if thats incorrect. I know, I know... And I wish you'd STOP, dammit, because I've NEVER SAID you said it wasn't needed. That's what I interpreted " throw -- don't give! -- it away, because that's just not true." to mean. What I am actually saying is, it's even MORE necessary than you're acknowledging, because the market actually DOESN'T correct ALL such "errors", in either the short OR the long run. I still believe that it will. You can of course disagree with me, and apparently you will. But I'll point to things like IBM/Sun/Oracle/etc/etc/etc's support of Linux as evidence - the market will work around a monopoly (or attempt to). Even without the DoJ's attempt to reign in Microsoft's monopoly, the rest of the market is reacting (to push it back into equilbrium). Addison
Post #7,532 by Ashton 9/2/01 11:45:04 PM Reply	Apologies to Mr. Smith, for having blamed him for the er Fix-Packs added by successors, in his name. I didn't know he Hisself had gone so far as to mention permanent aberrations.. This would make him even more prescient; was he the last Great one as well as the first? I'm a bit surprised that you suffered through so much of this dismality [ugh! what a horrible non-word] - though I couldn't know whether the exercises can indeed sharpen one's powers of observation (?) But can guess why Ayn-baby's doggerel (and her fan club of - those who call selves strict constructionists here, meaning often reactionaries) - might piss you off. That is, I haven't encountered an Ayn fan who wasn't a reprobate social Darwinist in all other noticeable areas as well. I guess what I notice often in such screeds too, is a form of the faux precision encountered in budding science students, before they have grasped concepts of, 'Redundant constraints' - as that applies to geometrical models of machines (3- vs 4- legged stool and such) and 'false precision' - incomprehension of the quite different meanings of, '5' and of '5.0000' (The umm 'significant' difference). If I can bear it, shall attempt a brief reread of Wealth of Nations, in atonement. It has been some time.. A.
Post #7,533 by bepatient 9/2/01 11:50:10 PM Reply	Natural monopoly From Auburn University website A monopoly that does not arise from government intervention in the marketplace to protect a favored firm from competition but rather from special characteristics of the production process in the industry under the current state of technology. Theoretically, natural monopoly arises when there are very large "economies of scale" relative to the existing demand for the industry's product, so that the larger the quantity of the good a single factory produces, the cheaper the average costs per unit get -- right up to production at a level more than sufficient to supply the entire demand in the relevant market area. This might occur when production of the good requires extremely large initial capital investments to even enter the market in a modest way but then producing additional output requires only very modest additional outlays beyond the fixed initial investment. Under such circumstances, the firm that initially starts out with the largest share of the market is in a position to price its output at a level below its (higher cost) competitors' costs of production and still make a profit while driving them out of the business -- and the larger its market share gets, the lower its unit costs become, until a monopoly position is finally obtained. (It is often argued that local telephone service, natural gas supply, and electrical power distribution fall into this category because of the heavy initial investments in networks of telephone lines, electrical lines and gas lines that are involved.) From the point of view of the rest of society, this single firm monopoly is potentially a blessing, since the one firm can in fact produce the amounts of the good they will demand at a lower total cost in resources than multiple competing firms could. However, once the firm has attained a monopoly position, there is the likelihood that it will use its unusual dominance of this market to maximize profits by restricting output below the level which a competitive market would lead to and raising prices above competitive levels. This would lower overall social welfare below the maximum theoretically achievable because price would be set above marginal costs of production. It is therefore argued by some economists that such natural monopolies represent instances of "market failure" and that this justifies government stepping in to regulate prices and output levels in such an industry so that price will more closely approximate marginal costs of production. (However, since the "natural monopolist" by definition faces a situation where his marginal costs will be lower than his average per unit costs, forcing him to accept a price equal to his marginal cost will result in his always making a loss rather than a profit from his business. Consequently, the government regulators would either have to pay the monopolist a subsidy to allow him a "fair return" on his investment or else fix the price of the product above its marginal costs of production anyway to accomplish the same end at greater social cost -- which is the usual approach taken.) Critics of government regulatory practices point out that: Instances of true "natural monopoly" situations seem upon close and systematic investigation to be extremely rare. The vast majority of actual real world monopolies are not "necessitated" by economies of scale but instead have been politically conferred by government at the instigation of formerly dominant firms grown fearful of emerging competition. Where natural monopoly situations do exist, they tend to be of comparatively short duration, since advances in technology quite regularly seem to create opportunities for new competitors to undercut established giants of the industry. Even where natural monopoly situations exist for prolonged periods, high elasticity of demand due to the availability of substitute goods very often means that "monopolistic" levels of price and output turn out to differ very little from the theoretical competitive optimum. Even where natural monopolies exist for prolonged periods and potentially would cause sizeable divergences from socially optimum levels of price and output, there is very little reason in theory or in historical experience to expect that real world regulatory agencies will in fact bring output and prices any closer to the theoretical optimum, because regulatory policies in practice are almost always much more responsive to arbitrary political pressures (especially from the regulated industry itself) than to any burning desire to have price equal marginal cost. Moreover, financing the regulatory agency's large and highly paid staff (as well as the payroll for the regulated firms' expanded legal department and lobbying organization) is itself a sizable social cost imposed by the regulatory process that often outweighs any social benefits achieved. Just to clarify the argument somewhat. It also carries my thoughts on the matter....that even in the case of "natural" monopolies...the market will eventually (via technology and/or substitution) correct itself. Its just that society (and I happen to agree with this also) doesn't feel inclined to wait (in some cases up to 100 years) for the market to do it. You were born...and so you're free...so Happy Birthday! _{Laurie Anderson} [link\|mailto:bepatient@aol.com\|BePatient]
Post #7,547 by boxley 9/3/01 1:08:08 AM Reply	yeah right Auburn :-) Although if I had the money back I spent in bets on their football team:) thanx, bill Our bureaucracy and our laws have turned the world into a clean, safe work camp. We are raising a nation of slaves. Chuck Palahniuk
Post #7,548 by boxley 9/3/01 1:08:09 AM Reply	yeah right Auburn :-) Although if I had the money back I spent in bets on their football team:) thanx, bill Our bureaucracy and our laws have turned the world into a clean, safe work camp. We are raising a nation of slaves. Chuck Palahniuk
Post #7,562 by bepatient 9/3/01 9:53:50 AM Reply	Just had to give the credit.... ..it was actually a pretty well put together index. You were born...and so you're free...so Happy Birthday! _{Laurie Anderson} [link\|mailto:bepatient@aol.com\|BePatient]

Welcome to IWETHEY!