[knlinux]

Please change my mind on that, but I don't understand the problem with the diapers store example (or any other product for that matter).

Amazon lowers the price, so the consumers will get to buy cheaper diapers (sounds good). Apparently Amazon can sell them at a very low margin, it's just choosing one that's just below what competition can offer. Then of course you have an issue with dumping (selling diapers with profit < $0), but I guess Amazon can afford to sell them at $0+eps profit, so its end game is to sell diapers at a lowest price to outcompete diaper stores on a crazy low margin. Well, maybe there won't be online diapers stores anymore. Most likely Amazon will then bump up the price back.. Well, so the diaper stores will appear again (if the new bumped-up price is above a margin at which an individual store can again operate). What will Amazon do then? Go back to step 1? Great, more cheap diapers at "eps" margin. This, of course, requires the third party stores to have low "startup" costs.

And maybe the bottom-line here is, that there is not going to be diapers.com and alike anymore. Well, maybe online diapers store is not a branch of industry one can enter in 2018 and expect to win big just by having a nicer website, without proposing something truly innovative that a giant like Amazon cannot offer (see how dollar shave club competed with Gilette/Wilkinson etc.)

[AndrewKemendo]

I feel like you outlined the problem pretty well.

Amazon, because they have information and economic advantage, can effectively manipulate the price of any good they want to make it uneconomical for any other company to play.

That's a single company having outsized power to determine the state of the market.

Using your example let's say that no other company can sell diapers online. That means for consumers that either don't want to or can't buy from Amazon, they are materially hurt from the lack of competition. Not only that, if they tried to start their own, they would be crushed just like the others. So in the end it's anti competition and increases friction for new business creation. A fundamental tenet of markets is that diverse competition is the primary forcing mechanism to ensure accessibility and quality.

The only possible argument here is that it's possible to have a singular organization that provides everything better than a diverse competitive market could. Neither history nor theory supports this thesis and the secondary effect on economies and political power compounds the downsides.

[knlinux]

> Using your example let's say that no other company can sell diapers online. That means for consumers that either don't want to or can't buy from Amazon, they are materially hurt from the lack of competition.

If a group of consumers can't or don't want to shop at Amazon, then they've just created a niche in the market (be it due to geography or anti-Amazon sentiment), that would create a demand for a diaper store that would serve those customers, because, by definition, they have just outcompeted Amazon by being more available or appealing to the consumers.

> The only possible argument here is that it's possible to have a singular organization that provides everything better than a diverse competitive market could. Neither history nor theory supports this thesis and the secondary effect on economies and political power compounds the downsides.

I believe history shows that as long as said singular organization it keeps providing everything, it will prevail (in everything). The moment it stops, it collapses and new players come in its place. This is, of course, as long as state doesn't decide to bail it out like it historically did in several heavily regulated industries, which are hard to enter partially because of said regulations. Consumers are rarely hurt in the process, as long as you let the big company take the fall, and let the new better companies grow its place once it stops delivering. If you regulate something like Search, to Google it's just extra operational costs, but as a side effect, Google becomes too big to fall, because no one else can really step in its boots anymore and enter the market.

[AndrewKemendo]

I already addressed your point, that they could just star their own:

Not only that, if they tried to start their own, they would be crushed just like the others.

As did you in the original reply. So we're going in circles on that point.

You're missing the broader point though. Even if a firm did everything, it would be bad for the economy because of lack of diversity. That's effectively what the Soviet Union did. It's not because it's the government that things don't work that way, it's because the government doesn't have competition that things fail when centrally managed.