A member of congress was complaining before about a merger — the NBC-Comcast deal — and he said the government had to stop it, because if the merger goes through, consumer prices will increase. Let’s stipulate this congressman, by virtue of winning a local popularity contest (election), is imbued with superior economic foresight and knows what prices will be in a given market for the indeterminate future. Why are higher prices a bad thing?
This is a question nobody asks in Antitrust World. It’s an article of faith that higher prices are bad if they occur after a merger. It’s okay if prices rise otherwise, just not after a merger. Again, nobody ever bothers to question the logical foundation of this position.
Many consumers would like to have their cake and eat it too: They want prices to remain level, or fall, irrespective of overall demand and available supply. Some of us are mature enough to understand why that doesn’t happen. Antitrust World, however, is populated by intellectual children who treat the laws of economics like it was a bedtime that one can negotiate and whine about to get an extra hour of play.
Of course, the antitrust argument against higher prices is more ethical than economic: It’s wrong, and thus illegal, for prices to rise after a merger. But again I ask, “Why?”
There’s a natural resistance to change that permeates the political culture. For example, most local governments now have “historic preservation” or “architectural review” boards that can veto even the smallest change to nominally private property. Just because something is old or preexisting, we’re told, the state must protect it from spontaneous change.
And that seems to be a core belief in Antitrust World. Whatever the prices are today are good because, well, they’re the prices today. Change is always suspect. Hence, the “democratic process” must supervise change to ensure things don’t change too dramatically. Nevermind the fact that true democracy occurs in the free market, not the authoritarian state.
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rises in politicians’ emoluments aren’t considered troubling. so i guess there are prices and there are prices…
i congratulate s.m. oliva for his sustained campaign against the harmful ftc, and the inane ideas that underpin its mission. keep pursuing this target, it’s a good specialization.
Yeah, I don’t think anything posted on this blog infuriates me more than Mr Oliva’s updates on what the tyrants at the FTC are up to. An instutition that wields almost unimaginable power, and yet most people couldn’t even tell you what the initials F-T-C stand for.
The humorous definition of Anti-Trust law
Company A’s prices are [?] than Company B’s :
Higher: Monopoly Pricing
Lower: Predatory Pricing
Equal: Market Collusion
Remarkably accurate
Let me go a step further and ask why are firms that gain significant market power on the free market considered bad? Even if a firm can dictate prices and earn “monopoly profits,” why is this a bad thing? Don’t increased profits mean increased investment, thus leading to higher levels of economic growth?
“…why are firms that gain significant market power on the free market considered bad?”
Because it feeds into the stupid leftist nightmare about one-firm markets “forcing” consumers to pay $100s of dollars for sausages full of animal excrement and disease. And because the majority of mankind is economically illiterate and incapable of rising above their ignorance. Hence the popularity of Keynes.
“Antitrust World, however, is populated by intellectual children who treat the laws of economics like it was a bedtime that one can negotiate and whine about to get an extra hour of play.”
A fully-cocked uppercut to the glass jaw of the antitrust crowd!
I’m curious what is this “mature” view of economics that sees higher prices as good? Maybe I’m missing something, but I found no substantive argument anywhere in this post.
Politicians only believe higher prices are only acceptable if they are the product of inflation.
Hmm. Let me remember back to the largest anti-trust case in my lifetime: AT&T.
On average, the average phone bill cost went up slightly for about 4 years following the divestiture. Why? Well up until that point, there were no other phone companies in the U.S.A. It took a few years for competition to truly form.
Now? Per-minute telephone rates are far cheaper than they were, and that’s not even adjusting for inflation.
Anti-trust is appropriate sometimes, especially when it concerns media.
Why all this love for Comcast? I recently switched from Comcast to Verizon FiOS, and now I get reliable broadband Internet, more channels, and for about 30% less than I was paying Comcast. That’s a result of competition. Before FiOS, Comcast was my only option for broadband Internet and they knew it.
I want a free market economy where the little guy can compete. I don’t want a massive conglomerate controlling my media. That’s what this NBC Comcast merger is. They’ll create the content and disseminate it to customers who have little competition to choose from, and they’ll be so large that they’ll have the ability to dictate technology standards to the vendors who make their equipment, including sweetheart discounts that will price competition out of the market.
Oh wait I forgot, they already don’t have competition.
Wake up folks.
Very much agree with your point of view, now I realize how urban village, and the formation of history, the author can guess there must be very much, the hope of study with you after the knowledge Let me go a step further and ask why are firms that gain significant market power on the free market considered bad? Even if a firm can dictate prices and earn “monopoly profits,”
A monopoly formed under a free market is detrimental to the monopoly owner and beneficial to workers and consumers. To be able to maintain a monopoly under a free market system, the business must offer a product of a quality that no one can match, a price that no one can beat, and offer wages so high that no one else can pay them. In effect, to stay a monopoly, the profit for the owner must be incredibly low. This is because any attempts to raise prices, cut back on expenses to the detriment of quality, or reduced wages will allow competition to enter the market to steal away customers or employees. Without a force mechanism to keep competition out of the market, they will have to use price, quality, and wages as their weapon.
The reality is that, in a true free market system, monopolies will be highly likely to go bankrupt. Without a competitive price market component, the business will lack the ability to know if they’re pricing their product correctly, building it the right way, or paying appropriate wages. And since the entity lacks the ability to call on a government to force competitors out of the market or erect barriers to entry, the natural tendency is to underprice the product and overpay the workers out of fear of losing total market control.
This is true, that consumer considers to ascend, at ordinary times the price of our lives is nervous, everybody likes to calm and life.
Ever heard of the Venus Project? A society model without economy, sounds appealing, huh?
All these rules, market laws, are disguised and shown as complicated to make them appear important and under control but I don’t believe they are. It’s simple and the real reasons behind some moves are pretty creepy sometimes. They are children. Decisions and power are toys and people are… pets?
“Society, have mercy on me, hope you’re not lonely without me”
As I continue to watch my net worth fall during my “Golden Years” I grow more distrustful of anything government says or does. I have no faith. My lack of faith is demonstrated when I go to the grocery and pay 3.19 for a decent loaf of bread. Last I checked grains needed to make bread are a renewable resource. Gasoline on the other hand is reported not to be renewable. With all the redtape and bs heaped on those who provide my gasoline I find it increasingly difficult to believe it cost more to provide me with grain and bread.
My research indicates it is though more costly to produce a loaf than a gallon. A long story short this is true due primarily to government involvement in agriculture. Once again the government should contain itself to maybe making bombs and deciding where and when to drop those bombs. Our government over the last 50 years give or take has been grossly incompetent in every aspect of its governance. Color my “Golden Years” black.
In my opinion, there is nothing wrong when prices go up, as long as the wages also go up. If wages stay flat and people need to buy these expensive products because of merging, we’ll all be poor…
When prices go up, wages don’t usually go up too. That’s the truth. So basically, it is really something that can make you lost your trust when this happen. Personally, I believe that the government should do something about this firm who controls the market. “Monopoly prices” are not good. The best thing the gov should do is to help small businesses gets a leverage in the market.
prices are very high as compare to BJP government.
prices are increasing but poor, slum society peoples are not eating also because they are not able to purchase these things.
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