But thin margins are problematic.

We will post responses that we think are of interest to our readers in our Letters section. So we have a system that produces monopoly, and all the incentives for every entrepreneur in competition to work as hard as possible to become the monopolist. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives – jobs, debts, incomes, all of that – as it affects us, our families, our children, now and into the future.

The former is obvious, and more commonly discussed.

That's right, kids as young as five and six years of age. The reward for having outcompeted the others is that you're now in a position to jack up the profits, and the prices, way beyond what you could have done before. Capitalism's growing problems (inequalities, instabilities, unsustainability etc.) In this two-part series, our correspondents explore the debates about market power, concentration and monopoly. . Mergers may be one explanation. They are there for you to be able to, with a click of a mouse, to follow us on Facebook, Twitter, and Instagram. The notion of “perfect competition” assumes the already existence of the hypothetical “perfect” market equilibrium that it is the task of real world dynamic competition to bring about. After all, every new idea must begin in some individual’s mind, and that person’s willingness to undertake the entrepreneurial task of bringing it to market. What, then, may be the cause behind a single seller situation, a “monopoly,” that may be considered as “anti-competitive” and “socially harmful”? To understand what Schumpeter called the competitive process of “creative destruction,” it is necessary to look beyond any seemingly “monopoly” situation at a moment in time, and take the longer historical perspective of the market as a dynamic process through time.

The pursuit of money and repeated, incremental success is exciting. A recent review by Cofece, Mexico’s new federal competition commission, suggested that weak competition laws force Mexicans to spend an extra 2.5bn pesos ($135m) each year on generic drugs than they otherwise would.

And by the way, you should be grateful because poor kids are the ones we hire, and that gives their poor families more income than they would otherwise have.

. No, no, we just have to deal with this little detail, the monopoly problem.

Mr López Obrador holds a deep, sincere concern for the poor, but he tends to favour bringing change through the example of his own personal magnetism instead of slow, unglamorous institution-building. The desirability of monopoly, from the perspective of a capitalist, is self-evident: it lowers risk and increases profits. It was government control of the airwaves that restricted radio and television broadcasting to a limited number of companies, again, until the late 1970s. Because it can't sell its goods, we're all going to Company A. Today flyers still endure hidden fees, late flights, bruised knees, clapped-out fittings and sub-par food. People who want us to engage one more time in an anti-monopoly crusade are doing something that in the end evades the problem, which is the system – capitalism – not this or that form of that system, such as competition and monopoly. It lays off its employees, it stops buying inputs, because it can't compete. It has figured out ways to make people work much more intensely, using up their brains, their muscles, their nerves, in ways that cause real long-term physical damage to working people. This is not just a domestic concern. For a while, Ford, General Motors, and Chrysler were the monopolies – or the oligopoly, if you like – in automobiles.

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Apple, Amazon, Google – the profits are staggering. All rights reserved. Competition is no unmixed blessing.

Learn about joining our translation team: http://bit.ly/2J2uIHHJump right in: http://bit.ly/2J3bEZR. . And as Austrian economist, Friedrich A. Hayek, explained in his famous articles, “The Use of Knowledge in Society “ (945) and “The Meaning of Competition” (1946), such a theory assumes away all the reality of what we normally think of as competition: an active rivalry among sellers each of whom has limited and imperfect knowledge, and is attempting to discover ways and means to make new, better and less expensive goods to offer to the consuming public, precisely as the method by which profits may be made and losses avoided.

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Good. “In consequence of the interdependence of all economic processes and given conditions on one another, and this with all other facts, no instance could be given of a sector, however small, of the event, the foresight of which would not mean, at the same time, the foresight of all the rest . It all depends.

What's more annoying than a relative demanding huge payouts simply because they drew a Chance card at the right moment? You get the picture. Because Coca-Cola and Pepsi erected a barrier to entry.

We do not know how to evaluate and judge the situation captured on that single frame taken out of the motion picture. But five years earlier, in 1916, Knight emphasized the fictitious and logical absurdities in: “ . “The individual exercising foresight must thus not only know exactly the influence of his own transactions on prices but the influence of every other individual, and of his own future behavior on that of others, especially of those relevant for him personally . Are people greedy? The owner may be making a profitable go of it, but if a rival entered the area and opened a competing general store, the sales and revenues now divided between the two of them may not be enough to cover their respective costs of operations; the end result being that both face losses.

Monopoly power and concentrated wealth do immense harm to the bottom third of the wealth spectrum. If companies capture more profits than they can spend, it can lead to a shortfall of demand. Each provokes movement in the other direction. In the textbook expositions, the “monopoly seller” is able to select that higher price and lower quantity combination that maximizes his profit, but which does not reflect the lower price and total larger quantity that would be offered on the market if there were a multitude of sellers rather than only one. And in the same way, we do not know how to evaluate a market situation of a single seller in the market unless we know the market processes before and after that diagram-depicted moment in time. The owner may be making a profitable go of it, but if a rival entered the area and opened a competing general store, the sales and revenues now divided between the two of them may not be enough to cover their respective costs of operations; the end result being that both face losses. Describe the phenomenon of creative destruction. . But there are a variety of reasons why there may be only one seller in a market at or over a given period of time. Every billboard, every magazine cover, every doorway of every institution you've ever been to has a picture of smiling, happy people drinking one or the other.

Yet airlines now make juicy profits. By that, I mean the advertiser tells you what's good about the product they've been told to advertise; they don't tell you what's bad about it. But introduce government intervention into the market system, and monopoly invariably becomes a social harm and an economic problem. Company A says hey, there's a whole bunch of workers that have just lost their job at Company B; they're trained in producing what we produce; let's go hire some of them.

Profits can never be earned, and losses can never be suffered.

Winning Monopoly takes luck, not skill-a revelation often made after three frustrating hours and an upended game board. Here's another one: Capitalists, employers, seeking to compete with one another, often engage in what we call automation.

Sign up to our free daily newsletter, The Economist today, Published since September 1843 to take part in “a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.”. They are there for you to be able to, with a click of a mouse, to follow us on Facebook, Twitter, and Instagram. You betcha – some more, some less – but that's really a separate matter. As a general rule, customers can expect long waits and surly staff. We've come to the end of the first half of today's Economic Update. That's how competition is supposed to work.

The word “monopoly” originates from the ancient Greek: “mono,” meaning single, and “poly,” meaning seller. Okay, if we replace people with machines, we throw those people out of work. IF MARKETS are becoming too cosy in the so-called “Anglo-Saxon” economies, where the winds of creative destruction traditionally blow most fiercely, what is the state of competition in Japan, famous for an altogether more clubbable form of capitalism? Twenty years later, they accounted for almost two-thirds. If, on the other hand, this single seller has misjudged future market demand for his product and suffers losses, it would not be socially desirable for rivals to enter his market and waste more time and resources producing a loss-making product – unless, of course, if they see a way to make profitable that which the initial “monopolist” could not. The competition that commands a decisive cost or quality advantage . In other words, the monopoly situation pictured in the diagram is presented without a context to reasonably analyze and interpret what conclusions might be made in terms of whether the “social” significance of this monopoly situation suggests the need for an economic policy to “correct” some “problem” with it. Thank you! In the tumultuous 1920s and 1930s Japan’s leaders introduced laws designed not to prohibit cartels, but to encourage them. But what makes a market supplier’s actions “monopolistic” in the theoretical world of “perfect competition”? They can't really get to that status.

Banks prefer to lend to state firms, because they know that in the event of trouble the government is likely to bail them out. . And I will be right back; stay with us. But since this tension does not exist only during games of Monopoly, it is that overarching tension that destroys families, not Monopoly itself. Others believe the arrangements were ultimately counterproductive. University of Chicago economist, Frank H. Knight, formalized this, now, textbook conception of “perfection competition” in Risk, Uncertainty, and Profit (1921).

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