The Washington Post has a good mainstream article on DVDs and programs that bypass controls that movie studios put into place on DVDs.
DVD Piracy Paranoia Proves Counterproductive
The interesting point this article raises at the very end is that the so-called “pirates” are actually those adherring to the free-market spirit. So how did this country get to the point where the government started opressing free market ventures and supporting monopolies and oligarchies?
On a side note, in thinking about free markets, I went down an interesting tangent of thought - in any economy, the goal is to make as much money as possible. Free market provides a level playing field and allows consumers to decide the winner.
On the other hand, the winner (ie, the company capturing the most market share) is inherently dangerous to the free market - monopolies exist to destroy free market, creating a market that they can have 100% control over. So free markets can give rise to their own destruction.
Granted, I’m not an economist, and I don’t think I’ve taken an economics class in high school, so I don’t understand any of this at all. I’m mostly thinking out loud, so if someone more knowledgeable wants to correct me, go right ahead.
June 22nd, 2003 at 7:16 pm
well I am not an economist either however I did take an economics course in high school.
So here is my two cents. In a true free market economy a monopoly is very difficult to form. There is literally nothing stopping a competitor from forming a rival company, service, or product. Unfortunately a true Free Market economy is hard to come by. Governments have a habit of interfering.
Take for example the most oft used example of a monopoly today “microsoft”.
Microsoft is truly the closest thing out there to a monopoly holding an obscene amount of market share. However as long as the Internet and open source continue to exist Microsoft can never truly capture 100% of the market share. Free Software will always be there as an option. Microsoft has no way to wipe them out. Unless in some way they get federal governments to declare free software illegal microsoft can’t get rid of it. which brings me back to my point. Only government help in a free market economy result in a free market economy. As far as practical considerations go anyway.
June 23rd, 2003 at 9:34 pm
Why is it that in a free market economy a monopoly is very difficult to form? Seems to me that if all the consumers choose the same company, said company would have a monopoly. Sure, nothing per se prevents competitors from being created, but if no consumers choose the competing product…
And once a monopoly springs up, that monopoly is going to do everything to maintain its status, namely by short-circuiting the free market that created it.
June 24th, 2003 at 4:32 pm
Ok lets say that the very unlikely event happens where all the consumers choose one company over another. That company has a monopoly. However it is only a monopoly in the sense that everyone chose them. Now say someone who is very rich in another industry says hey I could undercut this guy and get even richer by starting up a competitor product. He has the money to do so he wants to make even more money. So he does. Bingo no monopoly. You see the only way to stay a monopoly is as you said to short-circuit the free market. And as I said the only way to do that is to force the rest of the country to accept non free market status. Once that happens the free market no longer happens. But that can only happen if the government sanctions it. In effect only government intervention can support the existence of a monopoly.
Even in partial free market economies monopolies find it difficult to maintain that status. Again I use Microsoft as an example. Microsoft would be a monopoly if Open source did not exist. But open source does exist. Mostly in a response to Microsofts existence. No commercial competitors were coming on the scene so non commercial ones did. Therefore Microsoft still has competition. Maybe no commercial competition per se but competition nonetheless.
Another example is the Cable companies. Most people have only one cable company offering service in their area. Many people call the cable company a monopoly. It has no other cable competitors in the area. However as will happen in a free market someone saw an opportunity in that monopoly and started Satellite TV so now Cable has a competitor. So monopolies are not as much a threat as many people think. The real threat to a free market economy is in price fixing alliances. A situation like we had with the railroads and oil companies in our nations history. There was no Monopoly so to speak but all the companies agreed in a fixed price for their product thus eliminating competition between themselves. Still even those have a serious achilles heal. There is nothing to stop one of the members of the alliance to drop out. After all what better way to capture some market share really quick than to suddenly drop your price when you know every one of your competitors will be at the fixed price. You could grab hundreds of your competitors business just by backing out of the agreement.