Looks like someone still doesn't know/understand what a coercive monopoly is.

By vast array of capital, you must mean "infinite dollars" in order to be correct.

Since such an amount of money does not exist, you are incorrect.

Please explain how a business earning enough money to accumulate vast arrays of capital will have the infinite amount of dollars required to "drive off" an infinite influx of competition.

Wait, you're saying there's no such thing as infinite dollars, but claiming there is an infinite influx of competition???

Let me try your arguments: since such an amount of competition does not exist, you are incorrect.

lol except dollars are countable and and influx is not, sorry if that came off confusing.

You took the word "competition" out of my modifier "of competition" and treated it as the subject.

Influx implies the infinite amount of time.

It still isn't infinite, as you are arguing below.
Perhaps, but that's what I was thinking anyway (not at one point in time, but over time). Influx implies over a period of time. Nothing about infinite time. And since there likely isn't infinite time ... (I think you know the rest)

You do not need an infinite amount of dollars.

If you think so, it is you who has no clue about economics.

Why do you think govt. had to bust up monopolies in this country in the past? Because those companies had infinite dollars? lol

Even if the current monopoly has high profit margins, it doesn't mean new entrants can expect similar margins once they enter the market.

Teleco monopoly is a great example of this. The first entrant can charge as much as consumers are willing to pay and reap high margins. The second entrant cannot expect such margins because it will expect a price war with the existing player. You see this playing out with FIOS all over the place now. Even with a far superior product, Verizon is failing to charge higher prices and has decided to essentially halt the deployment of FiOS.

The perfect competition fails to account for this particular problem because it assumes all costs are variable. They are in the long run, but in the long run we're all dead.

And this is why the natural tendency in capitalism is monopoly. It's much more profitable for everyone to join the group than to stand out and compete against it.

If a monopoly does not charge consumers monopolistic prices then it is not a coercive monopoly and is in no way bad for consumers. Just the ability for new competitors to come in will keep a normal (non-coercive) monopoly competitive regardless of whether or not it has any actual, direct competitors. These type of monopolies do not hurt consumers. I'm surprised to see such a lack of understanding on this point.

This is really shallow thinking (I've been getting a whiff of "the markets will take care of it" throughout). Businesses can't engage in strategy, posturing, or other techniques to keep potential entrants out?

I guess what I'm saying is that your point might be right in the very simplest model of monopoly, but there are plenty of things that could be important that are left out of that model.

You're ****ing crazy. A 'benevolent' monopoly is as unsustainable as a 'benevolent' monarch. A curse wrapped in a temporary blessing is not a blessing.

That's a bad comparison though: Name one 'benevolent' monopoly. I can name several 'benevolent' monarchs, but for the life of me I can't think of any monopolies.

No of course not a benevolent monopoly. A monopoly that can not charge coercive prices due to potential competition. Standard Oil for instance, before it was broken up, had been lowering the price of oil as a result of its increased efficiency. That is not bad for the consumer. What is bad, is if a monopoly can charge coercive prices (ie. prices that maximize profits without the need to worry about competitors, potential competitors, or substitute products.) It is my assertion that with little government interference, this type of monopoly is very rare. Of course, I believe that patents should be protected by the government (for a time) and will lead to some coercive monopolies, but that is the price of innovation.

Businesses are free to do whatever they want to try to limit competition but almost everything (except getting government rules and regulation to help) generally proves ineffective after a short time. What exactly to you think a business will do in order to keep it's monopoly prices? The earlier poster mentioned buying out all competitors. It should be obvious that this will never be successful. As soon as the business community knows that every company that goes into industry X gets bought out then everyone and their mother is going to be going into industry X hoping to get bought out and make money. Obviously this can not go on forever.

The market will solve that problem! Wait, you're telling me that it's a good argument to ask a non-AE person for details, but it's not a valid question when posed to an AEist (whose usual reply is 'well, I'm not that smart, but someone else will figure it out'. Actually, that'll be my answer...what I think is that someone will figure it out! Bingo! QED.

I am not the earlier poster, and that's not my argument.

I would argue that with no violence or government interference, there is no way a business could posture, or strategize in a way that would effectively keep them free from worrying about competition. I asked because, I have studied quite a bit of business and I believe that whatever way a monopolistic business comes up with to keep competition out can and will be exploited by other businessmen for profit until they are forced to change. Or it might not work at all. So no, someone won't just figure it out. I can't give you a specific answer though unless you give me a specific challenge.

I don't think you're thinking deeply enough about this. Certainly there are markets in which monopolies just couldn't form. But there are others where it's simply not obvious that they wouldn't. Markets with large networking effects (facebook, anyone?) or with large fixed costs (the old AT&T, satellite radio) come to mind.

Also, it's a small example, but the market for mud for baseballs is a monopoly.

You still don't seem to understand my main point. Yes, normal monopolies can exist in abundance. Coercive monopolies (basically monopolies that charge very high prices without fear of competition) can not exist in abundance. Just because it is hard for a new company to enter industry X and be competitive does not mean that the major player in industry X is a coercive monopoly and should be broken up.

The negative effect of a coercive monopoly is that it raises the price above where the market price would be on the supply demand curve. It can do this because it faces no competitors. It allows firms to earn above normal economic profit and it hurts consumers cause they have to pay more. In some instances (see patents,) this is acceptable and in the spirit of free market competition, in other instances (see a single government licensed casino) this is unacceptable and directly against the spirit of free market competition. If a monopoly is not a coercive monopoly, then it is by definition, not hurting consumers and it totally in the spirit of a free market economy and should absolutely be allowed to stand. The only people that are hurt by this type of monopoly are the smaller, more inefficient competitors who certainly do not have a "right" to make money in a given industry.

Facebook now, and the old AT&T may beat all competitors because they are better companies. But they will not be able to survive if they raise their prices significantly above the markets supply demand curve regardless of any business strat that they use. (absent violence + gov interference.) I don't know anything about muddy balls sorry.

The old Bell Telephone monstrosity was pretty coercive. My cable company indulges in price discrimination all the time. The power company in my area provides literally the worst customer service of any company on planet earth.

The railroads used to be incredibly coercive before they were regulated, US Steel was incredibly coercive, and despite reducing prices Standard oil intentionally drove small competitors unwilling to sell out of business as standard practice.

I think you have this image in your head of what a monopoly is. It's wrong.

No, I get your main point (main claim actually). Just because I disagree (for very good reasons) doesn't mean I don't get what you're saying.

WTF does this mean? They've beaten all competitors, they're monopolies, and...? You don't think competition is stifled because of AT&T's historical existence? You don't think prices are higher because of AT&T's monopoly?

Simply asserting that for the Nth time doesn't make it true. What about AT&T not allowing anyone onto it's system? They have links to all phones in everyone's house. You need to set up a phone. Who are you going to contact, AT&T, or no-name, with whom you could call about 10 random people you don't know? There's a strategy that would keep them in monopoly. And don't you think AT&T could charge a premium? Same thing w/facebook...

Don't try to educate yourself about another example of monopoly, you might have to change your mind then.

[QUOTE=Coffee;33193722]1)
3) CEOs do not pay themselves. Their salaries are determined by the board and presented to stockholders. There have been several recent high-profile instances of stockholders refusing the pay schemes indicated by the board (Citigroup, for example).
QUOTE


you have a broad array of stockholders, and the board is picked by the executives..

How would stockholders go about makeing changes in pay and retraining workers? etc etc

[QUOTE=Janice7776;34258801] Board is not picked by executives.