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Anti-competitive practices.

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Luminar posted on Fri, Oct 5 2012 1:45 PM

Just a link: http://en.wikipedia.org/wiki/Anti-competitive_practices

What is the typical Austrian refutation of them? And do you affirm or deny that competition in the market may not be based on the value of the commodities being exchanged?

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Answered (Verified) Neodoxy replied on Wed, Oct 10 2012 12:26 PM
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"The market didn't touch Standard Oil. It just kept getting stronger and stronger until the government broke it up."

This is a combination of information which is false and debatable. SO's market share was falling consistently when it was broken up by the government. As for how SO was doing in its heyday, there is a lot of contested information here, although a lot of historians are coming to agree that it had to set consistently reasonable prices specifically because when it didn't competitors popped up. SO was very efficient both in prices and innovation.

As for your other examples I'd like to point out that, first of all, the industries are not in a free market, but furthermore I think that you're misunderstanding the Austrian stance towards monopoly. The stance is not that competition will eradicate monopolies, merely that competition will drive down prices and drive up innovation to the point where the monopoly is allocating the highest possible amount of both.

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
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Dumping - essentially predatory pricing:

http://candlemind.com/projects/progclub/file/michael/getEducated.php?listID=21

Exclusive dealing: so?

Price fixing: oligopolies are unstable. This is essentially the same argument as monopolies:

http://candlemind.com/projects/progclub/file/michael/histmon.php

Refusal to deal. Check out the wiki page on it. It makes no sense.

Dividing territories - same as monopoly

Limit Pricing - see predatory pricing

Tying - seems like competition would take care of this. Note, too, that tying isn't necessarily a bad thing. Tying helps to solve positive externalities.

Resale price maintenance - again, competition takes care of this.

as to the other ones after that, most seem like good arguments against government intervention.

Furthermore, the arguments against laissez-faire markets that are presented assume that government can do a good job of solving these "problems" without creating new ones - completely unproved.

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Any of the activities that do not involve committing an act of aggression, force or fraud against the person or property of another is legitimate activity and a moral activity although possibly "uncool".  People have rights to use their property as they deem fit as long as they do not violate the rights of another.  Not one item in the first list violates the property rights of others.  For example: Ping Golf Company makes me agree to not cut the prices of their products in order to do business.  The decision to enter into this agreement is mine and mine alone.  I do this because I value the profit from selling Ping products more than restrictions provided in the agreement.  And there may come a time when I do not feel this way but I would still be bound by my agreement.

In the second list the items that do have agents of force aggressing against otherwise peaceful and moral people include:
Subsidies, Regulations, Patents, Protectionism and Digital Rights Management.  These are truely the Anti-Competitive practices. 

 

 

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Luminar replied on Wed, Oct 10 2012 11:40 AM

You seem quite convinced that competition would eliminate anti-competitive behaviors, but are not exactly clear on how this mechanism works. If the anti-competitive behavior drives competing firms out of the market or establishes significant barriers to entry to get in the market, how does competition solve the problem of the anti-competitive behavior? Why does "refusal to deal" make no sense?

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Luminar replied on Wed, Oct 10 2012 12:15 PM

Some examples:

The market didn't touch Standard Oil. It just kept getting stronger and stronger until the government broke it up.


The auto market in the US was an oligopoly from the 1930s until the 1980s, before Japanese competition finally weakened it. So half a century.

The US steel market was dominated by a couple of countries from the start of the 20th century until the 1970s. 

And in the last 2 examples, it took a predatory foreign nation and national government backing of private firms to break up the non-competitive oligopolies.

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Answered (Verified) Neodoxy replied on Wed, Oct 10 2012 12:26 PM
Verified by Luminar

"The market didn't touch Standard Oil. It just kept getting stronger and stronger until the government broke it up."

This is a combination of information which is false and debatable. SO's market share was falling consistently when it was broken up by the government. As for how SO was doing in its heyday, there is a lot of contested information here, although a lot of historians are coming to agree that it had to set consistently reasonable prices specifically because when it didn't competitors popped up. SO was very efficient both in prices and innovation.

As for your other examples I'd like to point out that, first of all, the industries are not in a free market, but furthermore I think that you're misunderstanding the Austrian stance towards monopoly. The stance is not that competition will eradicate monopolies, merely that competition will drive down prices and drive up innovation to the point where the monopoly is allocating the highest possible amount of both.

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
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Bogart replied on Wed, Oct 10 2012 2:16 PM

Standard Oil had a 60% market share when it was broken up, and that was not because of monopoly but the Morgan-Rothchild political cabal was fighting the Rockfeller political cabal.

So what if the US Auto industry made 100% of autos in the USA, as long as there is no Federal Government to impose trade restrictions tariffs on foreign makers then that is all the good for the US manufacturers.  But there are lots of trade restrictions and tariffs on foreign made autos and light trucks and that has completely failed at maintaining a US lead in the industry.

So what, if US Steel and its colaborators could keep prices low and quality high, which they could not do in the long term, then good for them.

What is wrong with monopoly?  It is the govenrment force to keep the monopoly in place that matters.  Patents, trade restrictions, licensing, etc all work against competitors.

And I absolutely do not believe that competition is what destroys monopoly, but the actions of fickle consumers who are constantly on the look out for new products and services, or old ones that have better quality or lower prices.  Look at Netscape and M

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If you want to know anything about Monopolies, I would recommend listening to the Tom DiLorenzo speeches from all of the Mises Universities.  I have linked to all of DiLorenzo's Media hosted on Mises.org.  I would recommend searching for the word "Monopoly", and go through all 5 pages.  There are at least 7 speeches on the topic:

https://www.mises.org/media/author/425/Thomas-J-DiLorenzo

Bogart:
Standard Oil had a 60% market share when it was broken up, and that was not because of monopoly but the Morgan-Rothchild political cabal was fighting the Rockfeller political cabal.

I would also recommend reading this article by DiLorenzo titled, "The Myth of Natural Monopoly":

https://www.mises.org/daily/5266/The-Myth-of-Natural-Monopoly

And also recommend reading his book, "How Capitalism Saved America":

https://mises.org/store/Product2.aspx?ProductId=260

My long term project to get every PDF into EPUB: Mises Books

EPUB requests/News: (Semi-)Official Mises.org EPUB Release Topic

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