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#1 is striking in its naïveté. A free market, one that is functional annd competitive, actually requires a certain amount of governmental regulation to remain free, functional, and competitive. It does not happen by magic. Even the holy texts of capitalism make this point explicitly. For example, companies can do a number of things to stifle new entries to existing markets, which breaks the system. There are clear mechanisms that keep the system going, and they are somewhat easily circumvented with lax enforcement. Companies can temporarily collude or take other related actions to undercut a rising newcomer’s prices (the Walmart strategy), blanket them with legal fees (the IP/copyright route), contractually freeze them out (the Microsoft strategy), deceptively manipulate popular perception, or even outright lie, snipe key hires, unleash massive financial war chests, the options go on and on.
Walmart for example should not have been possible. They deliberately bankrupted thousands of companies if not more in their rise to the top. Do you remember this era? They are like the classic case of using their financial heft to artificially lower prices, drive local grocery stores out of business, and then raise the prices again. (And cheat countless suppliers and business partners along the way). And the scandals don’t stop. Why, even just yesterday I saw a story about how Walmart enriched itself by ignoring massive fraud and even lied to the government in the process. Note that Walmarts are too physically entrenched in various communities for much meaningful action to be taken, and boycotts just don’t work very well anymore.
There has been a century and a half long propaganda campaign against market regulation. Your using some of the ideas they came up with a century ago that have long since been neutered and debunked.
The pricing stuff is extra silly because you can talk yourself into thinking there is a monopoly or collusion based on any price change. Price goes down, ah it's the beginning stage of predatory pricing. Price goes up, ah it's the end stage of predatory pricing. Price stays the same ah they must be colluding because they don't have to change their prices.
It's the perfect example of reasoning backwards from a conclusion.
Intellectual property is generally only possible through centralized regulatory regimes. Prior to global trade markets it was more about trade secrets and being first to market was the main benefit of innovation. I am much more sympathetic to the argument that IP is one of the good use cases of centralized bureaucracy. But it's ridiculous to blame the results of abuse of centralized bureaucracy on markets.
Walmarts are still cheap. They are still convenient. They do face competition with online ordering.
"Walmart complaints" often say so much about the priorities of someone complaining. Wal Mart is mostly fine and doesn't do anything wrong. Most economists, even left leaning ones are on board with that. They do have a PR problem in politics though. And it's great to appeal to voters when complaining about Walmart.
However, you either ignored the rest of my list or didn't read it. Third bullet points was "local regulation". If a city or locality wants to ban Walmart that seems fine to me. I'll try to avoid living there, or fight the ordinance if it comes up locally. You have not provided any mechanism by which a centralized bureaucracy could even fix this supposed "problem", in fact they often do the opposite! A centralized bureaucracy is more likely to tell all localities "no if Walmart follows these specific rules then you have to allow them in".
If Walmart is your biggest complaint you should be agreeing with me, not getting hung up on an ideological fight.
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IMO selling at a loss to push market share and destroy competitors is already illegal. Probably not enforced enough.
I don't understand why. Uber is a great recent example of that. Their shareholders basically funded them selling below market price for a while. And then Lyft comes along and it turns out people that are price sensitive really don't have that much "brand loyalty". The shareholders bought a whole bunch of cheap rides, not a monopoly.
I thought it was more illegal than Wikipedia claims or I’m forgetting a key features of that.
https://en.wikipedia.org/wiki/Predatory_pricing
It becomes illegal if it bankrupts Lyft and the man Uber have a credible threat of doing another price war with a new entrant discourages competition. At which point Uber can hike prices.
Things with network effects seems more prone to these claims. Things with weaker network effects wouldn’t. Truth is it’s stupid to sell below costs (unless you just forecasted wrong) unless you have a plan to make more from those sales later.
Predatory pricing is BS. Almost any company can be "guilty" of it. The courts have over time had to reign in the excesses in enforcement. But the original applications of those laws were comically and transparently political. As I sort of asked of Jiro: consider what kind of price change disproves predatory pricing. The answer is 'nothing' as far as I can tell.
Economists have a saying "dont reason from a price change". It naively applies to just understanding how supply and demand have changed. But it can also be some sage wisdom about not rushing to judge the activities of some company.
I don’t think it’s BS. It is tough to prove though.
That phrase I believe was coined by Scott Sumner and popularized my marginal revolution. I once had a prof use it all the time and didn’t know where it came from. Golden Age of the Econ blogosphere.
Its tough to prove to the current expectations of the law. It wasn't always tough to "prove".
There are some examples of it blowing up in a company's face. Almost no examples of it ever working.
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Did they ever actually do that step? Is there a documented case of it actually happening? Or did they just have lower prices by being more efficient and focusing on cheap goods, and then continue to have lower prices? And for that matter for groceries specifically I don't think they tend to be significantly cheaper in the first place, they just have similar prices to any other discount grocery store.
Do Walmart's prices even vary enough from store to store to justify such a strategy? They're not always the same between stores or compared to their website (in large part due to the cost of shipping if you're looking at groceries specifically) but it hardly seems like a big enough difference to be part of some predatory pricing strategy.
One possible problem: you can compare prices iff there's competition, which will depress prices.
Yup people have done that. One of the main findings is that existing competition doesn't actually matter very much. It's potential competition and goods substitution that matter a lot.
Imagine someone buys up all the old fashioned wood pencil producers. They then jack up the price. Suddenly no one is buying the pencils. They switched to pens and mechanical pencils.
Many people confuse a product for the market. The product was pencils, the market was "writing implements". Also there is often an option to just not have the thing at all.
The only way people actually corner markets these days (the last half century) without IP is by going after specific metals/elements, which rarely has impacts on end consumers, but definitely screws over certain producers.
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