[xboxnolifes]

> ...one day, one of the municipal counselors just called up a friend who worked for a fiber laying company and asked them for a favor: put out a press release saying that they were “investigating” laying an undersea fiber to power a municipal fiber network on the little island.

They called in a favor that put pressure on the company from public expectations.

[HauntingPin]

Yes. What do you think happens in a competitive marketplace? Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console. That's literally competition.

The details of how the "public pressure" came to be don't matter, because the monopoly didn't know about that. All they knew was there was a potential competitor, so they behaved according to that information. That's how it works.

[xboxnolifes]

Maybe i misinterpreted the original comment, but having the government step in to pressure a company is not usually what i find people mean when they talk about competitive markets. Let alone when the pressure is through a side channel.

[karlgkk]

Frankly, I think you're trying to poke holes in a straightforward concept. And now you've dug your heels in and you're trying to justify it. But... let's ignore opinions and interpretations...

> Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console

This is completely inaccurate in every way possible. You even have the order of events backwards (Nintendo and Sony partnered first). There is in no way in which even the most charitable interpretation of this statement could bear out. Just about the only correct part is that you have some (but not all!) of the relevant parties involved.

If you're wrong about such a well documented, cut and dry matter of historical record, then what else are you wrong about? :)

[drfloyd51]

That isn’t actually refuting his original argument. Just proving his example false.

Then you beg the question with a bit of a straw man fallacy thrown in.

[karlgkk]

> That isn’t actually refuting his original argument. Just proving his example false.

Correct. It is extremely false. And it's an extremely well documented event, as well.

> Then you beg the question with a bit of a straw man fallacy thrown in.

I expressed my opinion. I did not misrepresent that person's argument (i didn't represent it at all). As for begging the question, well, I'm not sure what you're referring to, unless you mean the intensely cut and dry sequence of historical events? In which case... well, they're so unaligned with reality that it's comical.

[hrimfaxi]

I don't understand this line of thinking. The spreading of a false rumor is an example of a competitive marketplace? If this took place in a different domain wouldn't it be fraud? That it was in the public benefit seems orthogonal.

[kulahan]

Yes, if a simple unsubstantiated rumor is enough to get your competitors to spend potentially millions of dollars to fight you, that's a competition. Literally what else could it be?

It can be two things, anyways. You can utilize fraud to manage your competitors expectations. CEOs lie constantly about the state their products are in, in order to drum up more sales.

It has absolutely zero requirement to be beneficial to the public in order to be a competitive marketplace. They're also competing to make as much profit as possible, which has effectively zero benefit for the public.

[WalterBright]

> They're also competing to make as much profit as possible, which has effectively zero benefit for the public.

The end result is plenty of cheap stuff for people to buy. It's why free markets have full supermarkets and socialist markets have long lines.

Take the free market in software, for example. My entire software stack on my linux box cost me $0.

[nnevod]

Plenty of cheap stuff is a consequence of companies interested in people's money and, yes, presence of at least nominal competition between providers (i.e. they can be essentially a cartel, mirrioring each other exactly, but each still wants to step into other's money supply and retain its own). Choice for customer is present but also equally nominal.

In deficit economy, economic agents aren't really interested in people's money, and competition is between consumers - who'll bid higher and offer something of real interest to provider. So providers hoard stuff and there are long lines.

Benefit for public is not a boolean, it's a spectrum. Lots of cheap poor stuff readily availible is better than having to compete for stuff, but less good than having choice between cheap poor stuff and more expensive better stuff, for example. For the latter, you need non-nominal competition and providers having to compete whithin the market, not outside of it, and also each individual provider having infinitesimal effect on whole market.

[kulahan]

"Companies optimize to make as much money as possible, which is why there is cheap stuff" does not logically follow. I get what you're saying, but it's not related to the concept of companies trying to make as much profit as possible. Some will simply chase higher profit margins.

[WalterBright]

> Some will simply chase higher profit margins

That's constrained by the Law of Supply and Demand.

> "Companies optimize to make as much money as possible, which is why there is cheap stuff" does not logically follow.

Standard Oil gained great profits by reducing the price of kerosene by 70%.

[carefree-bob]

The math doesn't support this. There is great confusion about this point. Imagine, for example, that there are people that want to buy one unit of a product made by a monopoly that is a greedy corporation trying to maximize profits. And to keep things simple, make everything discreet in dollars.

10 people are willing to pay $2

5 people are willing to pay $3

1 person is willing to pay $4

and no one is able or willing to pay more than $4

So this would be the demand curve.

Now, let's do the supply curve. Keep it simple and assume a constant cost of production equal to $1 per unit.

The question is, if you are a greedy corporation, then how much should you charge to maximize your profits?

You should charge $2.

At that price, you will make $10 selling to the poors, $5 selling to the middle, and $1 selling to the rich. $16 bucks in profit for the greedy corporation.

If you charged $3, you would make $10 in profit selling to the middle, and $2 in profit selling to the rich, for only $12 in profit.

12 < 16. The greedy monopoly prefers $16 in profit to $12 in profit. That's why it lowers prices.

If you charged $4, you would make only $3 in profit.

3 < 16

In other words, it is profit maximization + law of demand + law of one price that drives down prices in the face of a demand curve.

People get this all wrong, they think that it requires perfect competition or some set of unobtainable market assumptions to make stuff affordable, it does not. It's just the law of demand (charge more and you get fewer customers) plus the law of one price (everyone pays the same amount).

This is why things like government subsidies to the poor to help them buy stuff actually drives prices up. It's why businesses wage an eternal war to be able to price discriminate. Health care, for example, would be much more affordable if hospitals had to post their prices and could not charge different rates to different people based on what they could squeeze from their insurance or based on how much money they had. It's why programs to help the poor by giving them more cash to buy stuff end up making things unaffordable for everyone else. It's why section 8 rental subsidies drive up rents. It's why during the covid subsidies, the new car price index went up from 147 to 188, but after the imposition of tariffs, it didn't change at all. So much of the world is explained just by some simple math, the law of one price, and the law of demand.

Because the companies are already charging the most to maximize their profits. They are not charities. Whenever a business says "if I have to pay this extra tax, it will just drive up prices", then ask them "Are you a charity? If you could charge more, then why aren't you charging more now? If you can't charge more now, why do you think you will be able to charge more tomorrow?"

Now, I'm not saying that there is no relationship between costs and prices, and that everything is set purely by demand and the law of one price. To get supply in there, you need more assumptions about the type of competition and the cost curve. But in general, supply only enters into the picture in that if you raise a firm's costs, then some firms go out of business because they can't pay the higher costs, and for the firms that are left, there is less competition, and it is this reduced competition that allows (some) of the increase costs to be passed on to consumers.

Always remember -- firms are already charging the most they can possibly charge in order to maximize total profits. That's the normal state of affairs, and it is what drives prices lower. Whether you are modeling a monopoly, or monopolistic competition, or an oligopoly, or perfect competition, it does not matter. They always charge the most they can possibly charge, and the law of demand, working with the law of one price, drives prices down.

[irishcoffee]

It is not fraud to claim that one is considering doing something, and publishing that information.

Imagine how that would actually play out if you were right. (You’re not)

[hrimfaxi]

But in the case of the grand parent the company had no intention of following through and did it seemingly at the request of the friend.

> one day, one of the municipal counselors just called up a friend who worked for a fiber laying company and asked them for a favor: put out a press release saying that they were “investigating” laying an undersea fiber to power a municipal fiber network on the little island.