Reply To: Predatory Pricing


Well I was just considering the semantic definition of the word “monopoly” ie mono meaning one…thus strictly speaking it means only one supplier. The courts can label whatever they want as a monopoly but that doesn’t make it so…ie the whole notion of predatory pricing is a bit silly…they charge too low to benefit consumers and harm competitors…but why is this type of harm considered bad? I mean, the only reason they are able to sell at a loss (predatory pricing) is that they can fall back on their capital reserves (savings) to get through the period they make no money…so if instead they use this massive capital reserves to innovate and out compete the competition with better products, then that is considered ok – both represent a use of disproportionate resource (resources which were lawfully acquired). My point is that neither are wrong or bad and govt has no business getting involved.

You ask the question: how would nascent competition emerge given the presence of dominant market presence? I would say the same way it has in the past. Look at Microsoft, they were once considered this impenetrable monopoly such that Doj was going to break them up. Now look where they are…they are still big but certainly not dominant, Apple, Google and others have made them somewhat irrelevant. Look at Kodak, once the king of the film industry, now they are in bankruptcy. But more to your direct question I might imagine an online advertising competitor would figure out some new approach to accessing consumers eyes, like Facebook, they took a totally different approach then google (speaking of which I just experimented with a Facebook ad run…their approach is genius, now I see why all these “likes” matter). So just because we cannot today in our armchairs imagine what that next angle might be (who knows maybe free movies with ads, or free music with ads) doesn’t mean it’s not possible such that we need the helping hand of, as Tom is fond of saying, our wise overlords. The issue though is as I mentioned in my first post is time, most do not want to wait the 10 or 20 years it might take the market to find solutions. But impatience is no justification for a loss of liberty.