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Why would it be worthwhile to compete with a dairy cartel? Of all the things one can do with capital, why go to war with a cartel over relatively small margins? You're assuming also that the cartel is operating only "economically", not also, eg., bribing, blackmailing, (stealing, murdering, ...), ...potential competitors. Why not just invite any competitor into the cartel? Why not buy them out? Why not "make life difficult" for them? The underlying assumption that "things wash out" requires supposing that an extremely simplistic newtonian model of an economy where politics doesnt really occur. But people are foremost political, ie., engaged in tribal behaviour, collectivising, using force, and so on. This doesnt "wash out". |
It may not be in Ontario. In a free market (i.e. one that respects property rights) it would be worthwhile. To see why, let me take your objections one by one.
Bribing competitors: The point of a cartel is to use force to prevent competition. Successful firms who are outcompeting their peers don't need to rely on force in this way, and enacting force is costly. The cost of the bribes must be factored into the cartels bottom line rendering them less efficient at meeting the market's needs. On the other hand the cartels inefficiencies require that the bribed competitors are leaving money on the table by taking the bribe instead of competing.
Blackmailing competitors: This supposes that you have some illegal or taboo information that can be used to blackmail competitors. This method of force will not work for any firms you cannot find dirt on. The cost of acquiring the blackmail is another source of inefficiency in the cartel at meeting the market's needs.
Stealing: Property rights are required in order to have a free market. Corrupt courts or enforcement of laws can prevent free markets from forming in the real world. Preventing corruption of these privileged offices is a difficult problem and could use more research.
Murdering: This is a special case of stealing as people own their own bodies so murder deprives them of their property.
> The underlying assumption that "things wash out" requires supposing that an extremely simplistic newtonian model of an economy where politics doesnt really occur.
I wasn't trying to say that "things wash out" no matter what. My point was that the circumstances surrounding monopolies affect their ability to prevent competition. It's easy to see that when an industry is doing well it attracts new competitors. Analyzing the reasons competitors are not able to compete in monopolized industries is the best way to understand how to prevent monopolies.