/liberty/ - Liberty

>>96544

Pretty much the same premise as what would happen to cartels in a free market.

>>96547

What happens to cartels?

>lol

>>96550

>Oligopolies are formed in markets that have an extremely high cost of entry

It doesn't allow for competition and you get an oligopoly in your media, food, clothing, etc.

>but lower variable costs over time, meaning that larger, consolidated firms are more able to decrease their average costs over time

Dis-economies of scale doesn't happen for well managed companies. An oligopoly would be well managed and it wouldn't allow for any new competition to take part of the market share

>>96550

Also let me add on. Look at the OP pic oligopolies are not good:

>Imperfect competition

>Game theory is thrown out the window of the few companies in the oligopoly know about each other's behavior

>All products are almost equally priced but have their own quirks

>The entry barriers are so high to beat out those companies and get your percentage of the market share

>what prevents collusion between oligopolies in a free market? or how are oligopolies prevented in a free market?

Not having a government powerful enough to give them enormous amounts in subsidies, copyright and patent chests that last for 234987 years, "too large to fail" bailout protections, huge regulatory apparatus built especially to the whims of large corporations for the explicit purpose of blocking out competition, or antitrust agencies that they can easily capture to allow their mergers anyways–for one.

>>96552

Last time I checked it was the government board formed by Florida's Oranges/Tropicana keeping companies from buying Grade B/Grade C oranges and making cheap orange juice, not Florida's Oranges or Tropicana.

>>96552

>oligopoly know about each other's behavior

They do not know each other's behavior. Look at Russia for example in the OPEC Plus cartel. They have not been meeting their obligation by delaying their decrease in production for quite sometime.

>>96551

>It doesn't allow for competition

There's more than one supplier, there's competition. Again, oligopolies form because in certain industries work better with them–if you had "more competition," i.e. many small firms, you would have higher prices and lower efficiency. Why would you want higher prices and lower efficiency?

>Dis-economies of scale

I wasn't talking about disenconomies of scale., actually. But since you brought it up, diseconomies of scale can and do happen in all markets. It doesn't matter how "well run" it is, increased complexity brings with it increased points of failure, increased overhead, and certain inefficiencies. The maximum profitable threshold is different in different economies, but it is undoubtedly present.

>>96552

<imperfect competition

There is nothing wrong with imperfect competition. "Perfect" competition is not inherently more desirable or "better" than other forms of competition, it's an academic construct. In fact, "perfect" competition is in many ways less desirable, because it implies there's no entrepreneurship, no advertising, no differentiation…in other words, a "perfectly competitive" market is a market which eliminates all of the methods through which firms compete with one another. https://mises.org/wire/why-perfect-competition-not-so-perfect

<Game theory is thrown out the window of the few companies in the oligopoly know about each other's behavior

This is false, on multiple levels. First, it's not correct to say that the different firms know about each other's decisions–the decisions happen simultaneously in most cases, which makes it impossible to know. They might be able to anticipate and predict what the other's decisions are, but that's not the same as firm knowledge. Second, it doesn't matter whether decisions are known or not, and that doesn' mean game theory is "thrown out the window", it just means the game turns into an iterative game rather than a simultaneous game.

<All products are almost equally priced but have their own quirks

And this is bad because…?

What's an example of an oligopoly in the real world that mandates state coercion in the interest of citizens?