I think the points are compatible, but not equivalent, if we make two adjustments. First, I agree that there need not be direct competition, in the sense of firms supplying roughly the same thing. It is not absolutely necessary to have to cola companies, if there are other things to drink, or two video- tape rental outlines, as long as they are competing with tv (including cable) and cinema, or, for that matter, the carnival on the corner for entertainment dollars. My one demurral on that score has to do with staples. There is no ready substitute for housing or comestibles. Yes, there are apartments, but that is just one form of housing; yes, there are farmers' markets, supermarkets, and delicatessens, but they are just different venues for selling food. In certain instances, I think the competition has to be closer.
Second, we can harmonize on the basis of conceiving of the possibility of new entrants as adequate competitive pressure. However, the nature of start up is discouraging to new entrants, and gives the advantage to established enterprises. Therefore, although I agree there is a ceiling to price- gouging, lest the field become too attractive, there is a substantial latitude to impose terms in a monopolistic fashion. Acknowledging the broader definition of competitor takes care of part of that, but I have some residual misgivings about the efficiency of the situation. I will have to give it some thought.
Third, we all have an interest, as consumers, in obtaining goods and services at as low a rate as possible. True, that vies with our interest, as workers and investors, of maximizing wages and profit. However, the twin pressures of lowering costs and raising return is the motor for efficiency in production. |
