<story><title>Google, Facebook, and Amazon benefit from an outdated definition of “monopoly”</title><url>https://qz.com/work/1460402/google-facebook-and-amazon-benefit-from-an-outdated-definition-of-monopoly/</url></story><parent_chain><item><author>Nullabillity</author><text>&amp;gt; The classic example is: Coca-Cola has a 95% market share of the cola market in some countries. Does it mean it has a monopoly? No.&lt;p&gt;Effectively, yes. Why is the market so disfunctional that a single company has effectively swallowed all competition?&lt;p&gt;&amp;gt; If it had 100% of the cola market, would it have a monopoly? No.&lt;p&gt;Err, yes.&lt;p&gt;&amp;gt; Because the cola market doesn&amp;#x27;t exist in isolation. Colas compete with all other sodas, with water, juices, etc. for a share of wallet and a share of stomach.&lt;p&gt;And AT&amp;amp;T wasn&amp;#x27;t a monopoly, since you could just walk to the person you want to talk to. Oh, wait..</text></item><item><author>ucaetano</author><text>It isn&amp;#x27;t outdated, it is an economics definition of a monopoly, and isn&amp;#x27;t even that: a monopoly is perfectly fine, AS LONG AS the economic power isn&amp;#x27;t abused to prevent competition which harms consumers.&lt;p&gt;What the author is proposing is that regulation is no longer based on economics and economic power, but on a vague definition of monopoly, and people are absurdly trigger-happy when calling something a monopoly.&lt;p&gt;The reason why anti-trust is based on precise economic definitions is that it leaves as little room as possible for the government to favor friendly players. When you need to prove harm to consumers, the bar is high, as it should be.&lt;p&gt;Otherwise, any government in power will simply abuse their own monopoly on regulation to favor and transfer wealth from society to friends.&lt;p&gt;The classic example is: Coca-Cola has a 95% market share of the cola market in some countries. Does it mean it has a monopoly? No.&lt;p&gt;If it had 100% of the cola market, would it have a monopoly? No.&lt;p&gt;Because the cola market doesn&amp;#x27;t exist in isolation. Colas compete with all other sodas, with water, juices, etc. for a share of wallet and a share of stomach.</text></item></parent_chain><comment><author>AnthonyMouse</author><text>&amp;gt; Why is the market so disfunctional that a single company has effectively swallowed all competition?&lt;p&gt;This is actually pretty common in hypercompetitive commodity markets. The largest player has a slight cost advantage due to economies of scale, so they have the best price and everyone buys from them. But they still have no market power because their market share doesn&amp;#x27;t come from barriers to entry.&lt;p&gt;&amp;gt; Err, yes.&lt;p&gt;It&amp;#x27;s not necessarily a monopoly even at 100% when there are competitors who &lt;i&gt;could&lt;/i&gt; immediately enter the market if the incumbent were to be so audacious as to raise prices by 4%, or do anything else the customer even mildly dislikes -- because that fact keeps them from ever doing it.&lt;p&gt;Notice that this is &lt;i&gt;not&lt;/i&gt; how it works for Comcast, because it&amp;#x27;s not cheap or quick to wire a city with fiber, so they can get away with a great deal of abuse before anyone else would show up to compete -- even if they only had 50% market share, as long as the other 50% is another company doing all the same abusive stuff.&lt;p&gt;&amp;gt; And AT&amp;amp;T wasn&amp;#x27;t a monopoly, since you could just walk to the person you want to talk to. Oh, wait..&lt;p&gt;To be a substitute it has to be a practical alternative that can be used for the same purpose at approximately the same cost. Having to spend an hour walking is not the same cost as picking up the phone.</text></comment>
<story><title>Google, Facebook, and Amazon benefit from an outdated definition of “monopoly”</title><url>https://qz.com/work/1460402/google-facebook-and-amazon-benefit-from-an-outdated-definition-of-monopoly/</url></story><parent_chain><item><author>Nullabillity</author><text>&amp;gt; The classic example is: Coca-Cola has a 95% market share of the cola market in some countries. Does it mean it has a monopoly? No.&lt;p&gt;Effectively, yes. Why is the market so disfunctional that a single company has effectively swallowed all competition?&lt;p&gt;&amp;gt; If it had 100% of the cola market, would it have a monopoly? No.&lt;p&gt;Err, yes.&lt;p&gt;&amp;gt; Because the cola market doesn&amp;#x27;t exist in isolation. Colas compete with all other sodas, with water, juices, etc. for a share of wallet and a share of stomach.&lt;p&gt;And AT&amp;amp;T wasn&amp;#x27;t a monopoly, since you could just walk to the person you want to talk to. Oh, wait..</text></item><item><author>ucaetano</author><text>It isn&amp;#x27;t outdated, it is an economics definition of a monopoly, and isn&amp;#x27;t even that: a monopoly is perfectly fine, AS LONG AS the economic power isn&amp;#x27;t abused to prevent competition which harms consumers.&lt;p&gt;What the author is proposing is that regulation is no longer based on economics and economic power, but on a vague definition of monopoly, and people are absurdly trigger-happy when calling something a monopoly.&lt;p&gt;The reason why anti-trust is based on precise economic definitions is that it leaves as little room as possible for the government to favor friendly players. When you need to prove harm to consumers, the bar is high, as it should be.&lt;p&gt;Otherwise, any government in power will simply abuse their own monopoly on regulation to favor and transfer wealth from society to friends.&lt;p&gt;The classic example is: Coca-Cola has a 95% market share of the cola market in some countries. Does it mean it has a monopoly? No.&lt;p&gt;If it had 100% of the cola market, would it have a monopoly? No.&lt;p&gt;Because the cola market doesn&amp;#x27;t exist in isolation. Colas compete with all other sodas, with water, juices, etc. for a share of wallet and a share of stomach.</text></item></parent_chain><comment><author>matthewmacleod</author><text>That’s not a particularly convincing argument - it’s like saying that Sony has a monopoly in the PlayStation market - possibly true, but not that useful!</text></comment>