Does the Free Market work when Companies Collude? by ANTHONYT

REAL WORLD EVENT DISCUSSIONS

Does the Free Market work when Companies Collude?

POSTED BY: ANTHONYT
UPDATED: Tuesday, July 17, 2012 04:44
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Monday, July 16, 2012 8:07 AM

Freedom is Important because People are Important

http://money.cnn.com/2012/07/16/technology/lcd-class-action-settlement
/index.htm?source=cnn_bin

Hello,

According to this article, several tech companies colluded to fix the price of LCD displays. This brings into question the viability of an unfettered free market. A Free Market is supposed to compete in order to keep prices in control according to supply and demand. But what happens when the free participants in a free market decide to work together to take some of the 'free' out of the system and interfere with competition and supply and demand?

And what happens if nobody is there to stop them?

It seems a free market can enslave itself.

--Anthony

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Monday, July 16, 2012 9:11 AM

CANTTAKESKY

Here in Peru, there are a lot of motorcycle taxis. They are individually operated, but they like to collude and standardize the fares by distance so everyone charges more or less the same fares to the same places. I have no problem with collusion itself.

For me, the cardinal feature of the free market is the ability of the market to respond to supply and demand as quickly as possible. The best response time comes from owner operated businesses. If there is a festival, and the demand for taxis goes up one afternoon, the taxi operators can raise their prices to maximize profit. Similarly, on a slow afternoon, they can lower their prices to attract business. As business owners with their own stake in the profits, they have the authority to respond immediately and effectively to market dynamics. THIS is what makes a market free.

Price collusions amongst large companies, or any other prefabricated market decision, including those made by law, keep the market from responding fluidly like it is supposed to. Without the fluidity, it is no longer a free market but a rigid, static market. In America, outside of mom-and-pop businesses that are owner operated, a rigid, unfree market is what we have.

-----
So many gods, so many creeds,
So many paths that wind and wind,
While just the art of being kind
is all the sad world needs.
- Ella Wheeler Wilcox, poet (1850-1919)

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Monday, July 16, 2012 9:24 AM

ANTHONYT

Freedom is Important because People are Important

Hello,

Do you then see it as the size and paucity of number of certain types of businesses which creates a danger?

I notice you feel collusion is a happy thing amongst a multitude of independent operators, but seemed less in favor when conducted by large corps.

--Anthony

Note to Self:
Raptor - woman testifying about birth control is a slut (the term fits.)
Six - Wow, isn't Niki quite the CUNT? And, yes, I spell that in all caps....
Wulf - Niki is a stupid fucking bitch who should hurry up and die.

“The stupid neither forgive nor forget; the naive forgive and forget; the wise forgive but do not forget.” -Thomas Szasz

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Monday, July 16, 2012 9:49 AM

CANTTAKESKY

Quote:
Originally posted by ANTHONYT:
Do you then see it as the size and paucity of number of certain types of businesses which creates a danger?

Yes, I am anti-big. Size sacrifices the dexterity and fluidity that defines a free market. Collusion amongst a multitude of small, independent operators can still flow like a swarm of bugs or a flock of birds. Collusion amongst a few, large corporations flies, and sinks, like a rigid metal plane.

The first is free. The second is not.

-----
So many gods, so many creeds,
So many paths that wind and wind,
While just the art of being kind
is all the sad world needs.
- Ella Wheeler Wilcox, poet (1850-1919)

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Monday, July 16, 2012 9:57 AM

ANTHONYT

Freedom is Important because People are Important

Hello,

Sometimes I wonder what my country would be like if each business was limited to 2,000 employees, with no ability to own subsidiary businesses.

I wonder if it might not make for a more dynamic marketplace. Something like Apple might be a company with 1900 eggheads and 100 executives who design things and then hand them off, so that the Ipad is manufactured by twenty different companies all independently hired to build the unit and another twenty companies to distribute it.

UPS would be replaced with a hundred local delivery services, or possibly it would be like Apple and hire a hundred local delivery services who conform to its desired business practices under the UPS standard. Etc.

I wonder if such a simple size limit might create the greater level of fluidity you suggest as being vital in a Free Market.

--Anthony

Note to Self:
Raptor - woman testifying about birth control is a slut (the term fits.)
Six - Wow, isn't Niki quite the CUNT? And, yes, I spell that in all caps....
Wulf - Niki is a stupid fucking bitch who should hurry up and die.

“The stupid neither forgive nor forget; the naive forgive and forget; the wise forgive but do not forget.” -Thomas Szasz

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Monday, July 16, 2012 10:40 AM

CANTTAKESKY

I am in favor of size limits. But I am, of course, not in favor or legislating or enforcing size limits.

The only real advantage that comes with size is power. And more wealth to buy govt (more power). Otherwise, size is cumbersome, slow, and inefficient.

I suspect that if we were to not have govt to buy, businesses would naturally downsize to become more competitive and responsive.

-----
So many gods, so many creeds,
So many paths that wind and wind,
While just the art of being kind
is all the sad world needs.
- Ella Wheeler Wilcox, poet (1850-1919)

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Monday, July 16, 2012 10:53 AM

ANTHONYT

Freedom is Important because People are Important

Hello,

I think another possible benefit of size is the ability to absolutely dominate products, supplies, and regions. Monopolizing them. At this point, inefficiency becomes unimportant if there are no other options.

--Anthony

Note to Self:
Raptor - woman testifying about birth control is a slut (the term fits.)
Six - Wow, isn't Niki quite the CUNT? And, yes, I spell that in all caps....
Wulf - Niki is a stupid fucking bitch who should hurry up and die.

“The stupid neither forgive nor forget; the naive forgive and forget; the wise forgive but do not forget.” -Thomas Szasz

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Monday, July 16, 2012 11:12 AM

SIGNYM

I believe in solving problems, not sharing them.

In the comparison of a flock of birds to an airplane, there is one thing an airplane can do that a flock of birds can't: move large objects at high speed. There are some things a small company simply CAN'T do.

Another advantage that large companies have is called "efficiencies of scale". Even Adam Smith recognized it when he opined that a single person performing many tasks is less efficient than a single person performing a single task. If you have many small companies, each company has (in essence) a CEO and CFO. Each company needs its own business plan, its own site (and rental and utility costs), its own suppliers, its own tools. A large company can spread those costs over larger a scale of production. In the race between large and small, large almost always wins. That's why mom&pop have gone the way of the dodo in the face of Walmart's significant advantages.

Hoping that "the market" will fix itself and devolve back to smaller businesses absent government regulation is just wishful thinking.

So, TONY, in sum, the answer to your question "Does the Free Market work when Companies Collude?" is NO. It also doesn't work in the presence of large companies that nearly monopolize a market. Even Adam Smith will tell you that.

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Monday, July 16, 2012 5:46 PM

NIKI2

Gettin' old, but still a hippie at heart...

Well, you two dealt with that pretty damned well. My answer was gonna be "No", too, but you did it so much better and made so many good points I'll just shut up now.

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Monday, July 16, 2012 10:31 PM

6IXSTRINGJACK

I get your point Anthony, but that's been going on all over the place for decades. The fact that our country is running a 13 Trillion plus debt is just a "minor" factor in that point.

It's just like in Deus Ex 2, when you find out late in the game that not only was the "franchise war of wars" over coffee in the game just a giant red-herring of the game, but upon further review and a second playthrough it mirrors perfectly my view on the relationship between Democrat and Republican, not by US..... but by the people in charge.

Queequeg's coffee is known for being organically grown. The "Queequechino" is popular amongst its customers. Unlike Pequod's, Queequeg's shops seem to be situated in poorer areas of cities, for example, Lower Seattle, Cairo Medina, or Trier.

Unlike Queequeg's, Pequod's shops seem to be oriented to a more affluent clientele, for example, they are located in areas such as Upper Seattle and Cairo Arcology. Pequod's establishments serve nanotechnologically enhanced coffee. Their speciality is the "Pequachino".

In the Standard Security Corporation's Headquarters' evidence room in Trier, Germany, Alex Denton discovers that both Pequod's and Queequeg's belong to the same single parent company, unbeknownst to all their coffee shop owners. Two different coffee chains were created to conquer different tastes of customers; the rivalry between the networks is intended to stimulate public interest in their products all the while bringing profit for one monopolistic corporation. Denton can choose whether or not to reveal this business secret to the owner of Queequeg's shop in Trier.

I guess the BEST I can say about this Anthony is that at least I live in a country that's still free enough that not only can I play a game that would make me see parallels to much more important decisions being made in real life, but I can talk about it online and still live to tell the tale.

At least we have that going for us, right?

God help our children and grandchildren in that regard....

"A government is a body of people, usually notably ungoverned." ~Shepherd Book

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Tuesday, July 17, 2012 3:41 AM

NEWOLDBROWNCOAT

By definition,a government regulated economy is not " free. "

By definition, a market dominated by a monopoly or a few very large companies is not free either.

Any of you remember the early days of the PC? Or have you read up on the history of it? I remember computer magazines that featured the same game program for maybe a dozen platforms: the Altair, the Commodore, Atari, the Sinclair, Texas Instruments, the Apple 2, the IBM PCjr, the RadioShack, several more. Apple wasn't even dominant then, IBM was trying to get into the market, Microsoft was a bit player. Each machine had its own advantages and strengths, and a user could choose cheaper, faster, better graphics, more storage, a machine tailored to his application or whatever he liked. So there was competition.

And today, what? MicroSoft has 90+ % of the market, Mac and Linux maybe 5 % each? Is today's market any freer? "Course not.

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Tuesday, July 17, 2012 4:44 AM

FREMDFIRMA

Well, see, once upon a time, there was this thing about being accountable to the people who work for you.
But then the Corps AND the Govt colluded against it, and at Blair Mountain that kinda came to an end, replaced by employee pacification schemes like the AFL (fuck you Sam Gompers, just fuck you) who were just another extension of Corp-Govt control.
http://en.wikipedia.org/wiki/Battle_of_Blair_Mountain

See, so long as any attempt by workers to check the power of a Corporation is blocked by Govt via the entire friggin weight of the US Armed Forces (ALWAYS on the Corp side, under the guise of "maintaining order"), unless a workers collective could fight and overpower both the Corp goons AND the US Military, it's kinda pointless isn't it?
And if they could, might as well just take over! (See Also: Catalonia)

And when any attempt by customers to check the power of a Corporation is blocked by Govt (see also: Auto bailout, Airline bailout, Bank bailout) it really does kind of become an exercise in futility.

Mind you, the idea of putting that same Govt which enabled, abetted or downright committed such abuses in charge of forestalling those kind of abuses doesn't exactly strike me as an effective solution, why should it ?

-F

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