The modern liberals deny that the concentration of concerns is a intrinsic characteristic to progress of industry. They blame the "government barriers".
But the master, Ludwig von Mises, in their book, Liberalism, Chapter II, Section 7 on cartels and monopolies, said: "The division of labor gives a specialized function to each productive unit in the economy. This process never stops as long as economic development continues. [...]. With the progress of specialization, the area served by an individual supplier must continue to widen. [...]. Undoubtedly this progressive specialization of production tends toward the development in every field of enterprises that have the whole world for their market. If this development is not opposed by protectionist and other anticapitalist measures, the result will be that in every branch of production there will be a relatively small number of concerns, or even only a single concern, intent on producing with the highest degree of specialization and on supplying the whole world."
The austrian view of competition is that there doesn't have to be a bunch of firms competing with one another at the same time. Potential entry into the market is enough. The old chess adage, "the threat is greater than the execution".
^
If the current market leaders are unprotected from market entry (in other words, no government raising barriers, regulations, giving them monopoly, etc), they know that if they were to hike prices, adjacent companies would come in, new companies would form, or their lowly competitors would step up, to undercut the proft margin.
Them, knowing that, don't. Them, knowing that, seek the state to help them on that.
i am willing to bet right now that this thread will go 2 pages before someone googles increasing returns and how they can create barriers to entry for new companies.
i am also willing to bet that thread will likely never mention Schumpeter's hypothesis that monopolies and limited competition might be desirable because competition it reduced the returns on innovation (competitors quickly moving to adopt your inventions). not that i agree with this hypothesis, just funny because he is probably the least read Austrian economist among "Austrian" economists.
Ambition is a dream with a V8 engine - Elvis Presley
Yuberries, read rightly the words by Mises? He said clearly that "not opposed by protectionist and other anticapitalist measures, the result will be that in every branch of production there will be a relatively small number of concerns, or even only a single concern".
Unless you disagree on the written by Mises.
I don't really agree with Mises that it is always the case, or even the majority of cases. There's always going to be niche competition, I don't see how can a single company provide anything for the entire world. edit: but now I've re-read it and Mises said that the intent would be, not that it would actually happen. Okay.
But that's irrelevant, because Mises doesn't think a "monopoly" is a bad thing, and I don't either. I put monopoly in quotes because I have utter disgust for the popular, defied meaning of the word. I prefer to call them leaders. True monopolies are government-protected from competition.
Student:i am willing to bet right now that this thread will go 2 pages before someone googles increasing returns and how they can create barriers to entry for new companies.
Student:i am also willing to bet that thread will likely never mention Schumpeter's hypothesis that monopolies and limited competition might be desirable because competition it reduced the returns on innovation (competitors quickly moving to adopt your inventions). not that i agree with this hypothesis, just funny because he is probably the least read Austrian economist among "Austrian" economists.
There are always barriers to entry, but the point is that an abusive monopoly makes it profitable to enter the market even if its really hard. I might have to get $500mil together, but if my business plan is sound, the investors should come. There are a lot of creative things you can do.
first, you seem to be ignoring the possibility of a natural monopoly (where increasing returns are so great that only one producer is feasible). http://en.wikipedia.org/wiki/Natural_monopoly
but beyond that, you also seem to be using a wide variety of unspoken assumptions like complete credit markets and that market demand is continuous.
hmmm where else are increasing returns ignored, credit markets are assumed to be complete and demand functions are assumed to be continuos? oh yeah! the perfect competition model.
for all the moaning some people do about the perfect competition on this board a lot of posters seem to unwittingly rely on it as an accurate representation of reality when arguing their positions.
Student:first, you seem to be ignoring the possibility of a natural monopoly (where increasing returns are so great that only one producer is feasible).
Student:but beyond that, you also seem to be using a wide variety of unspoken assumptions like complete credit markets and that market demand is continuous.
Student:for all the moaning some people do about the perfect competition on this board a lot of posters seem to unwittingly rely on it as an accurate representation of reality when arguing their positions.
Sieben wrote the following post at Wed, Sep 1 2010 5:15 AM: The austrian view of competition is that there doesn't have to be a bunch of firms competing with one another at the same time. Potential entry into the market is enough. The old chess adage, "the threat is greater than the execution".
Sieben wrote the following post at Wed, Sep 1 2010 5:15 AM:
In fact the Austrian view of competition does not even need to include any producer in the model - it is strictly based on supply. Simply put, a market is competitive if anyone is allowed to increase the supply. Even if all firms have exited production because of low demand, it is still a competitive market.
The fallacies of intellectual communism, a compilation - On the nature of power
i am willing to bet right now that this thread will go 2 pages before someone googles increasing returns and how they can create barriers to entry for new companies. i am also willing to bet that thread will likely never mention Schumpeter's hypothesis that monopolies and limited competition might be desirable because competition it reduced the returns on innovation (competitors quickly moving to adopt your inventions). not that i agree with this hypothesis, just funny because he is probably the least read Austrian economist among "Austrian" economists.
What's the point of this comment? To show that you passed microecon 101? Good job. And Schumpeter is an Austrian only in the most general sense; he sided with the market socialists during the calculation debates. Either way, it's pretty simple: Austrians reject meaningless measures like concentration ratio's and the Herfindahl Index.
Also, you don't believe in x-efficiency?
You seem to be ignoring that the existence of "natural monopolies" is highly controversial and debated.
you also seem to be using a wide variety of unspoken assumptions like complete credit markets
Saying that one should expect highly profitable ventures to eventually find financing is not "implicitly assuming complete credit markets."
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
What's the point of this comment? To show that you passed microecon 101?
Well, I know I passed microecon 101. but i think the insights often bear repeating because they can be ignored by those who have not had the opportunity to take such a course.
with regards to schumpeter, what is the point of your comment? you don't disagree with my statement, just note that some austrians don't like what he had to say during the calculation debate. okay?
and therefore seiben should ignore the possibility of natural monopolies all together. makes sense to me.
one should "expect" (how often?) "highly profitable" (how profitable?) ventures to "eventually" (when?) find financing.
not that i agree with this hypothesis, just funny because he is probably the least read Austrian economist among "Austrian" economists.
Shumpeter seems fairly well known actually, unlike, say, Haberler, or Rosenstein-Rodan.
Your usage of the term "Austrain economist" was slightly misleading (not that you intended it to be). Schumpeter is not part of the Bohm-Bawerkian/Wicksellian/Misesian tradition.
i'll let you decide where schumpeter fits in the sacred cannon. i'm sure you've made a careful study of his work as well as the work of bohm-bawerk (who was schumpeter's professor and who identified as one of the "ten great economists") and knutt wicksell, (who schumpeter also regarded highly and whose contributions to monetary theory were utilized in schumpeter's own studies of the business cycle). so i'm sure you know what you're talking about.
i only have a passing interest in economic intellectual history so prob shouldn't get into it.