Neither is necessarily bad, I assume from the Austrian viewpoint. I’m wondering what potential problems arise from either phenomenon for the sovereign individual - his or her economic interests - standard of living, material wealth, the quality of that wealth, etc. Tack on criterion in that vein.
First of all this is a never ending debate.
Read my quote on corporatism.
AE has already solved this problem…“The market will take care of itself”
For those of you who have other thoughts in mind…“it does not matter whether we arrive at a monopoly or cartel by market or government means…it is just plain evil for a healthy economy”
How we would deal with such a situation is up to endless debate…most…no matter how stupid are acceptable.
Let me add that for decades the competitiveness of the US economy has declined enormously. All these mergers and mergers have created giants too big to fail…to big to exist.
Monopolies and cartels are inherently unstable in the market…if you listen to tom dilorenzo’s myth of natural monopoly, this should clear things up for you.
They vaguely resemble the central planner governments, which coincidentally also produce unstable outcomes for the markets.
@cognivist, I recommend this article by current dean of the Austrian School, Israel Kirzner that answers your questions: http://www.thefreemanonline.org/featured/the-irresistible-force-of-market-competition/
AUSTRIAN Perspective:
What is needed to stimulate that all-powerful entrepreneurial-competitive process upon which the free market depends is nothing more than freedom of entry to anyone with an idea of how to profit by serving consumers more faithfully than they are being currently served. -par. 15
Outlawing price collusion…No one knows when a price is “too high”; only the competitive process of entry (or of the threat of potential entry) can reveal the lowest level of price that can be sustained. So long as entry is open, the colluding firms may, in seeking to maintain their higher prices, be unwittingly attracting new entrants to reveal the truth that lower prices are sustainable. Or they may, if no such new entry occurs, be demonstrating that the cost structure indeed dictates these higher prices, as being the lowest ones sustainable in a competitive world. -par. 12
MAINSTREAM View: So if a market more or less in its entirety, colluses the price of a given product, how does the “all-powerful entrepreneurial-competitive process” get its materials, for the suppliers, to produce a cheaper product via a more efficient competition/product when prices across the board are not necessarily reflective of the “actual” lowest sustainable price?
Murray Rothbard speaks at length about collusion of prices. His research shows that collusions only succeed when they are enforced by laws [i.e by violence]. But every attempt at voluntary coluusions was always shattered in short order by that wonderful fount of goodness for humanity, greed.
Because after all, a collusion always requires that the conspirators divvy up the profits. I will only agree not to compete with you by lowering my prices if you guarentee me my slice of the pie. So that each one of the conspirators is also having a limitation placed on him. You can only sell X units a month, and have to let the other guys sell to the rest of the market.
Historically, sooner rather than later, someone wanted more than his share. So he made secret deals with his potential customers to cut the price. And of course word got out, and the price fixing conpiracy collapsed.
Theoreticaslly, of course that will happen. Or else others who were not part of the conspiracy, seeing a buck to be made, will enter the field and charge less tahn the conspirators for the product.
In cases where laws were passed guarenteeing collusion, like with the railroads at the turn of the century, something else happened. People just used the railroads less. Much less. To the extent that the railroads were dealt a blow from which they never recovered. I don’t know if this is always the case.
Laziness prevents me from finding the Rothbard source, but it’s here on the site. Take ye mouse in hand and search, my son.