Kerberos said:
As a matter of correction, you seem to be focusing on a very narrow field of microeconomics in order to make point in the extreme. I am not too sure whether this is deliberate on your part or not.
Relaxing assumptions on information, the number of sellers, homogeneity and barriers to entry will lead away from a "perfectly competitive" equilibrium. However, unless you go to extremes you will normally arrive at "monopolistic competition", under which economic efficiency will still result, there will be no super normal profits (i.e. consumers will not be "ripped off").
Going to much greater extremes leads to ologopolistic solutions - which are not as simple as you suggest (in fact they are fiendishly complex) and might not lead to "rip-off".
Further down the line again you might get monopolisitic results, which may or may not give some gain to either efficiency or equity from the intervention of regulation (find and read Krugman's "Robber Barons" analogy on the regulation and anti trust action against Microsoft for something that is easily understood by laymen.)
In the wash, Shanek takes an extreme position, but no more than you do. Market work with a level of efficiency that is truly amazing in the overwhelming majority of instances. Where there are market failures, due to some of the things you mention it does not serve to overreact, but to understand the problem and take necessary action - if any (because intervention can easily makes things even worse).
My focus on specific concepts of economic theory is deliberate but my point isn't as extreme as you think, as a matter of fact it's extremely inextreme. Shanek seems to insist that the market will always under all curcumstances deliver perfect outcomes. My point is simply that that isn't true. Therefore I focus on the aspects of economic theory that descripe the shortcoming of the free market. that doesn't mena that I think the state should mikro manage every aspect of the economy.Drooper said:
Not quite true, a monopolistic competitive outcome isn't economically efficient. Ther eare no over normal profits in the long run, but there are deadweight looses though theese are normally fairly small.
I don't really think I've sugested that oligopolistic systems are simple. Part, but not all, of the reason they're complex though is that if the CEO's want to stay out of jail then they will have to refrain from actual collusion (or not get caught). Repealing anti-trust laws would turn "competition" into a cooperative game.
As I said you've misunderstod my position, or perhaps I've stated it badly. I don't think that there're large market failures all over the place, nor do I think that the state should intervene in every little market failure because, as you say, they might make things worse. I do however think that repealing all regulation, closing your eyes and chanting "the market will provide", "the market will provide" would be a seriously bad move.
Kerberos said:
As I said, those are startup costs, not sunk costs.
Strawman. Apparently the only way you can avoid admitting you're wrong.
Competitive equilibrium is a new equilibrium point based on the shift in the supply curve, as I said from the very beginning. You admitted this when you said, "A competitive equilibrium is the market equilibrium in a competitive market," but then shifted when it didn't make your point and said, "Having fun with you straw man? Market equilibrium isn't the same as a competitive equilibrium."
You're using the parts of the page that refer to microeconomic effects in a discussion about macroeconomics and you say I don't understand "economy" (sic)?
Have you read the Macroeconomics thread?
Kerberos said:
No, I don't, and I have specifically told you otherwise on several occasions. Once again, you resort to strawman arguments to try and gain a cheap victory.
But you do use them to justify government invervention in the economy, when the evidence doesn't show that it is necessary or justified.
Okay, let's look at Standard Oil again: every time they tried to raise prices, competition started springing up again. So to maintain their oligopoly, they kept prices low. They had to compete with companies that didn't exist yet. The result is, this "monopoly" run by a "robber baron" resulted in the poor being able to afford heating oil for the very first time.
Oh, so now there's something wrong with cooperation?
Let me give you an example: after the FCC prohibited Dish Network and DirecTV from merging because they would create a monopoly (even though it would only give them 17% of the market; they later approved the AT&T-Comcast merger which gave the new company over 30%, so judge for yourself how well that works), and after the FCC stopped them from trading satellite frequencies so they could both service their customers with fewer satellite locations, they decided to work together to make their systems compatible so they could use each other's frequencies and not, for example, have to transmit HBO twice. The FCC called this "collusion" and stopped them. Any of these acts would have been a clear benefit to consumers; it wasn't stopped to benefit them, it was stopped to benefit the cable broadcasters, who represent a huge lobby in Washington, who didn't want the increased competition that would result from this. So these laws actually prevent competition.
shanek said:
Apart from that last, which is utterly untrue, there is a slight difference between a theoretical political platform, and one that has been tested in the waters.
Marxism also works - in theory. Anarchism works - in theory.
What you haven't shown is that Libertarianism works in real life, and not just in your imagination. And I know you have a hard time showing that, because you cannot get people to vote for you.
0%, shanek. Remember?
CFLarsen said:
I'm sure you want to believe that, because you want to avoid the fact that you've despicably and dishonestly accused another poster of a serious crime. But, did you notice how not one single poster took your side, even those in favor of gun control?
Kerberos said:
Your correction is quite true and well taken - it will not quite be cost minimisation.
Your final para. summation is perhaps correct. Market outcomes are relatively robust to the realistic relaxation of the assumptions used to derive perfectly competitive outcomes. Your posts (up to this last one) tend to overstate the importance of this theoretical curio within economic theory.
CFLarsen said:
Since it's not true, it's libel. I agree with Drooper, and the only reason I'm continuing to respond to this is to make it absolutely clear that no one here is threatening you at all. The threat is all in your mind; that was my original point, and you have confirmed it beyond anything I could have ever hoped to have done.