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Free Market Monopolization Theory...
Here is the note that I made regarding the saturation of free market
Note that this is several months old and I haven't been diligent in keeping
it fully up to date...
> X-within-URL: http://einstein/ravage/free.market.monopolization.html
> This is the theory in its current working version:
> An unregulated (free-market) economy will inherently monopolize when, but
> not necessarily only if, the following are present:
> - the commen assumption by current free market models that consumers
> are rational is irrational. A consideration of succesful marketing
> mechanisms and human psychology will clearly demonstrate that
> consumers are at best partialy rational. This is the fault in all
> anarchy models (eg crypto-anarchy), they assume in an axiomatic
> fashion that all participants will cooperate for not only their
> individual best interest but the cooperatives best interest without
> sufficient recognition that these may in many cases be in conflict.
> It is the same failing every form of government without a clear and
> proscribed list of individual and state rights and limits has, the
> assumption that some minimal set of behaviours or goals will satisfy
> all participants in all cases. The theory 'What is best for all is
> best for the one' is false.
> - the importance of cooperation for mutual benefit that is axiomatic
> in current free market theories is false. Mathematicaly the prisoners
> paradox provides maximum payoff when defection occurs at a relatively
> high rate and in a random pattern. A primary goal of any business is
> not to ensure the survival of itself and it competitors but rather to
> eliminate competition through more succesful strategies. A rational
> consumer will act irrationaly at times because it is in their long
> term best interest. Therefore the distinction between rational and
> irrational consumers is false.
> - the market is saturated, in other words the number of consumers at
> any given time are equal to or less than the service providers ability
> to provide that service (or resource). This means the long-term survival
> of firms is a function of retained market share and raw resource share
> - the technology and/or start-up costs are high in material and
> intellectual factors. This minimizes the potential for new providers
> to start up. Providers will also require non-disclosure and other
> mechanisms to reduce sharing of information and cross-communications
> except under controlled conditions. Expect an increase in certifications
> and implimentation standards required to do business with the more
> succesful of these providers.
> - an individual or small group of service providers have a small but
> distinct efficiency advantage in technology, manufacturing, or
> marketing. Over a long-enough time this market advantage will grow
> and as a result widen the 'technology gap' between firms.
> - expect the most efficient firms to share their profit with the
> critical intellectual contributors. This further reduces the
> problem of cross-communication and new provider start-up.
> - expect to see the more successful providers to join in co-ops with
> the less succesful providers. This will be under the surreptitous
> goal of 'developing technology'. It's actual goal will be to cause
> these smaller firms to commit resources to such enterprises. As soon
> as it is strategicaly advantagous the primary providers will break-off
> the co-op. This has the effect of further reducing the ability of the
> smaller providers to react in a timely manner to market changes or
> develop new technology due to resource starvation.
> - expect to see the less efficient providers to combine in an effort
> to reap the benefits of shared market share and resources. Unless
> this partnering provides a more efficient model and there is sufficient
> time for that efficiency to develop these new providers will eventualy
> fail or be joined with other providers.
> - expect to see the primary provider buy those less efficient providers
> that don't fail completely. These purchases will be as a result of
> some new or unexpected technology that will significantly increase
> the market share of the primary provider -or- it will be with the
> goal of eliminating this secondary technology and forcing those
> market shares to do without or use the primary providers technology.
> - initialy prices for services will be low to promote purchasing but
> as providers obtain larger market shares their prices will increase
> over time and out of step with inflation and other market forces in
> order to widen the profit gap. The strategy is one of 'use it or
The seeker is a finder.
Ancient Persian Proverb
The Armadillo Group ,::////;::-. James Choate
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