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sbrook
Premium,Mod
join:2001-12-14
H0H 0H0
 ·Rogers Hi-Speed
Host:
Rogers
Bell Canada
| Free market competition is OK in a truly free market
But there's not really any such thing as a Free Market.
Looks to me like the "Free Market Competition" mantra failed dismally with the break up of the AT&T Bell conglomerate, considering they've been reassembling themselves just like "The Terminator".
Then look at the long distance companies ... MCI, Sprint, WorldCom, WillTel. The glory days fell apart.
One of the mantras is that competition will drive prices down. There's a side effect to driving prices down. Companies cut their margins SO slim that they are on a probable suicide mission. The slightest downturn in the economy (such as is happening now) can result in disaster instead of just a rough ride.
The alternative effect of competition is to play the "let's set prices actually higher than our competitor, but entice people over to us with a short term bargain, or bundling. Then we hope they'll stay with us instead of change." Or there's the "Oh look, they've raised their prices ... that gives us liberty to raise ours, even though we don't need to, and we might actually win customers over if we didn't raise them, but we'll do it anyway".
Then there's the monopolistic behaviours of the telcos and the cable cos who have such a huge proportion of the market in their respective areas that they can afford to take the "We're the telco/cableco, we can do what we like" stance, so when they bump prices, because people don't want to change, less than the normal "churn rate" subscribers quit, so it's barely a blip on the radar.
Free market can only work where you're dealing in a market of relative equals. In any other market, the big boys become the bullies and grind the little guys out of business and become monopolistic in their attitudes.
This may LOOK good in some ways, but it is certainly NOT to the benefit of the consumer. Hence the need for regulation, particularly in the areas where spending is not for Joe Public's discretionary dollars, but more for their "essential" dollars. | |
MrMoody
But the Grinch ... did Not.
join:2002-09-03
Smithfield, NC
 ·Embarq
 ·Skype
·magicjack.com
| Yes. The problem is, having only 2-4 players doesn't make competition. When you only have 1-3 competitors it's much more profitable to cooperate with them and keep prices up, even if the cooperation has to remain unspoken.
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The public is a poor business manager. | |
TheGhost
Premium
join:2003-01-03
Lake Forest, IL
clubs:
 ·AT&T U-Verse
·Comcast
| In many places it is even worse, there is at most one competitor. Since the companies are not forced to offer uniform pricing across their service areas, they can keep prices higher in the no competition areas to fund cut rate prices where they have competition until the competition goes out of business.
Also, many times when there are just two options, the oligopoly buddy system kicks in. | |
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