Most people distrust for-profit firms, relative to individuals and other kinds of orgs. And they distrust such firms more when they get larger, and serve a larger fraction of their industries. This fear expresses itself in criticism, suspicion, and support for politicians who increase the regulations and taxes on such orgs.
not sure social media would work as a utility. one reason why regulating utilities qua utilities works is that it is impossible for customers to go without, and often impissible to switch to a competitor, whereas niether is true in the case of social media. I think this is because as strong as the network affects of facebook, twitter, etc. are, they are nohwere near as strong as that of the local water company, the only person providing water within 30 miles of me
To what extent do you consider that utilities regulation for “the organizations that supply water, sewer, gas, electricity, phone, cable TV, internet, roads, mail, and other common city services” works better than an unregulated regime? I am surprised that you take the “widespread consensus that there is in fact a real problem with market power in these cases, and that regulation is usually a reasonable solution” so uncritically. Widespread consensuses about economic matters are very often wrong.
Are you just arguing for a name change? Why would that have any effect? I speculate:
Perhaps it would narrow the focus to network effects? That sounds good, but I think everyone's focused on network effects already.
There seems to be a difference in that utility regulation is all-or-nothing, while antitrust is a often a bolt from the blue, with no follow-up to establish standards. But the "all" of utility regulation is often so micro-managed, nationalization might be better. There seems to be an implication in the name that legislatures would choose companies or fields to declare utilities and set up specific bureaucracies for regulating them, rather than empowering bureaucracies to find monopolies.
...
The most celebrated antitrust action, the break up of Ma Bell, was, in fact, the breakup of a regulated utility, which hadn't been allowed to set its own prices since it was it was granted a monopoly in 1918, and wasn't allowed to sell anything else (eg, transistors) since 1956. The government couldn't just end utility regulation, but had to pretend the monopoly had another cause.
Oil does not have any obvious network effect, but has historically been entangled with railroads: Standard Oil was vertically integrated with railroads; the Texas Railroad Commission set oil prices for decades.
We seem to have here a matter of degree, onto which we are imposing a black-and-white, all-or-nothing distinction (utility vs. no regulation), in which case of course it will be hard to know where to draw the line, amid the borderline cases. It is not even clear that social media--or cable TV, or mail, etc.--should be treated as utilities.
I agree that regulators are captured. The solution should be to fix that corruption instead of to give up on attempts to stop price fixing and other anti-competitive behavior.
Which major companies would you currently consider promising candidates to define as utilities?To my mind, the social media are obvious. Not sure if there are others.
The firm I see the most complaints about is Google and their price is $0. Also it and the other firms most complained about are software companies.
Software comes with relatively low switching costs. You can switch from Google Search to DuckDuckGo or Brave Search with less than three minutes’ worth of clicking and typing (very low time and effort cost) and at $0 money cost.
Software is extremely abundant. There are billions of websites and anyone can access any of them almost anywhere in the world. For example: there are hundreds of search engines. See Seirdy’s list: https://seirdy.one/2021/03/.... Anyone can switch to almost any of them in a few minutes, at zero price. Yet this is when people most worry about monopolies?
The model of deadweight loss due to monopoly says that a firm with a natural monopoly might not lower prices as much as it would be efficient for it to, if it can’t price-discriminate. Natural monopolies lower prices (that’s why a natural monopoly comes to exist, it reduces total costs compared to having multiple firms), the problem is only that they do not lower them as much as would be efficient. On this here is what we observe:
1. People who are distrustful of large firms are usually also opposed to price discrimination?
2. They also want large firms to be broken up? But breaking up a natural monopoly causes prices to raise, because while you are removing the market power that incentivized the firm to seek higher profit per unit (at the cost of lower sales) by pricing higher than it otherwise would have, you are also removing the efficiencies that caused the firm to have the overall lower prices that are why it became a natural monopoly.
These people are also very worried about consumer-harming cases of planned obsolescence, of which only the same few alleged examples are always brought up, usually the Phoebus cartel, the Apple smartphones and printers. If their reasoning for why we should expect planned obsolescence were correct, planned obsolescence ought to be very widespread and we ought to have a lot of clear examples of it. Instead we always hear about these same few examples. And in each of these examples, there are competing explanations, involving consumer benefits rather than consumer harms, that are at least as capable of explaining what we observe (lifetime and efficiency or quality tradeoffs, bug fixes, usability improvements that can be bypassed if the consumer wants it so).
What about the theory that vague anti-trust statutes function as a kind of deterrant to companies accumulating market share to use in harmful ways? You'd still expect it's application, when applied, to be negative even if it was overall beneficial.
Did the breakup of AT&T help the internet spread faster than it would have otherwise?
not sure social media would work as a utility. one reason why regulating utilities qua utilities works is that it is impossible for customers to go without, and often impissible to switch to a competitor, whereas niether is true in the case of social media. I think this is because as strong as the network affects of facebook, twitter, etc. are, they are nohwere near as strong as that of the local water company, the only person providing water within 30 miles of me
To what extent do you consider that utilities regulation for “the organizations that supply water, sewer, gas, electricity, phone, cable TV, internet, roads, mail, and other common city services” works better than an unregulated regime? I am surprised that you take the “widespread consensus that there is in fact a real problem with market power in these cases, and that regulation is usually a reasonable solution” so uncritically. Widespread consensuses about economic matters are very often wrong.
Are you just arguing for a name change? Why would that have any effect? I speculate:
Perhaps it would narrow the focus to network effects? That sounds good, but I think everyone's focused on network effects already.
There seems to be a difference in that utility regulation is all-or-nothing, while antitrust is a often a bolt from the blue, with no follow-up to establish standards. But the "all" of utility regulation is often so micro-managed, nationalization might be better. There seems to be an implication in the name that legislatures would choose companies or fields to declare utilities and set up specific bureaucracies for regulating them, rather than empowering bureaucracies to find monopolies.
...
The most celebrated antitrust action, the break up of Ma Bell, was, in fact, the breakup of a regulated utility, which hadn't been allowed to set its own prices since it was it was granted a monopoly in 1918, and wasn't allowed to sell anything else (eg, transistors) since 1956. The government couldn't just end utility regulation, but had to pretend the monopoly had another cause.
Oil does not have any obvious network effect, but has historically been entangled with railroads: Standard Oil was vertically integrated with railroads; the Texas Railroad Commission set oil prices for decades.
We seem to have here a matter of degree, onto which we are imposing a black-and-white, all-or-nothing distinction (utility vs. no regulation), in which case of course it will be hard to know where to draw the line, amid the borderline cases. It is not even clear that social media--or cable TV, or mail, etc.--should be treated as utilities.
The question is what to do while we wait for your fix. I say we don't let captured regulators mess stuff up in the meanwhile.
I agree that regulators are captured. The solution should be to fix that corruption instead of to give up on attempts to stop price fixing and other anti-competitive behavior.
Which major companies would you currently consider promising candidates to define as utilities?To my mind, the social media are obvious. Not sure if there are others.
The firm I see the most complaints about is Google and their price is $0. Also it and the other firms most complained about are software companies.
Software comes with relatively low switching costs. You can switch from Google Search to DuckDuckGo or Brave Search with less than three minutes’ worth of clicking and typing (very low time and effort cost) and at $0 money cost.
Software is extremely abundant. There are billions of websites and anyone can access any of them almost anywhere in the world. For example: there are hundreds of search engines. See Seirdy’s list: https://seirdy.one/2021/03/.... Anyone can switch to almost any of them in a few minutes, at zero price. Yet this is when people most worry about monopolies?
The model of deadweight loss due to monopoly says that a firm with a natural monopoly might not lower prices as much as it would be efficient for it to, if it can’t price-discriminate. Natural monopolies lower prices (that’s why a natural monopoly comes to exist, it reduces total costs compared to having multiple firms), the problem is only that they do not lower them as much as would be efficient. On this here is what we observe:
1. People who are distrustful of large firms are usually also opposed to price discrimination?
2. They also want large firms to be broken up? But breaking up a natural monopoly causes prices to raise, because while you are removing the market power that incentivized the firm to seek higher profit per unit (at the cost of lower sales) by pricing higher than it otherwise would have, you are also removing the efficiencies that caused the firm to have the overall lower prices that are why it became a natural monopoly.
These people are also very worried about consumer-harming cases of planned obsolescence, of which only the same few alleged examples are always brought up, usually the Phoebus cartel, the Apple smartphones and printers. If their reasoning for why we should expect planned obsolescence were correct, planned obsolescence ought to be very widespread and we ought to have a lot of clear examples of it. Instead we always hear about these same few examples. And in each of these examples, there are competing explanations, involving consumer benefits rather than consumer harms, that are at least as capable of explaining what we observe (lifetime and efficiency or quality tradeoffs, bug fixes, usability improvements that can be bypassed if the consumer wants it so).
What about the theory that vague anti-trust statutes function as a kind of deterrant to companies accumulating market share to use in harmful ways? You'd still expect it's application, when applied, to be negative even if it was overall beneficial.