Quote:
Originally Posted by HeHasReturned
Well, there are many, but I'll start with one good reason for regulating; Monopoly. Hence the big trusts of the 19th century and the eventual trust busting by Teddy and Taft. Anti-capitalism? Sure. But it worked out well for us, didn't it?
EDIT: I meant regulating, not deregulating
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Predatory monopolies aren't stable in a market economy, and "regular" monopolies can only remain stable through benefiting the consumer. In fact, the only monopolies in existence are granted by governmental law, such as patents.
The Theory of Predatory Pricing fails to see the competitive need of price cutting. Since this is an automotive forum, I'll use Henry Ford as an example here. In 1908, he started on his quest to create the Model T, and at first he lost money and market share to Oldsmobile and Buick. However, 1910 turned out to be a good year for the industry, and all of Ford's advisers suggested raising the price of his Model T to match his competitors. But, Ford reduced the price in contradiction to his advisers suggestions. This risky practice paid off for Ford in the sense he became a dominant force in the automotive industry. However, the question here is to ask why didn't Ford get accused of "predatory pricing?" He knowingly cut prices to undercut the competition. The fact is that his decision vastly benefiting consumers by offering the first affordable vehicle for the average American.
The benefiting of consumers is the only way a monopoly can still exist. If they simply chose to raise prices because they're the only company who offers a certain product, then you'd see large amounts of competition arise. This coupled with the fact that, in the long-run, they would no longer produce profit. History has already shown competition arising in Standard Oil's situation. In its peak in the 1880s, Standard Oil controlled 90% of the market, however, by 1911, Standard Oil only controlled ~65% due to renewed competition.