this post was submitted on 22 Sep 2024
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OP, I dislike Amazon and there are definitely plenty of things to accuse them of, but you're literally describing the opposite of a monopoly. Generally the problem with monopolies is that they don't need to compete on price so they'll over charge. You're saying Amazon is a monopoly because they're the cheapest option though. That doesn't follow.
Again, to be clear, I dislike them and believe they're worthy of criticism. I'm not trying to "defend Amazon" here.
You need to read The Amazon Anti-Trust Paradox by current FTC head Lina Khan. She argues that the consumer price oriented monopoly definition is old and outdated in the modern setting. Price is not a sufficient proxy for market competitiveness, and in fact, price is often used to kill competitiveness by undercutting new and innovative products.
I sound agree price isn’t always the best factor to determine a monopoly.
Walmart use to go into a town, sell everything cheap and drive everything else out of business.
It’s one of the many reason I hate Walmart.
Growing up we have a cool downtown area. It wasn’t big but had a bunch of small stores. They all closed within a year of Walmart.
I avoid Walmart for this reason as well as quite a few others. I think I've bought about 3 items from them in the past 5-6 years and typically because they have something others don't that i need that same day (the store is about a mile from my house.)
Wal-Mart does a lot of things I don't agree with. Their labor practices along with their sourcing and many other things make them the last place I will shop.
I agree. Price is important in a classic "free market" where people compete to sell goods and services for cheaper and whoever does it best makes a profit and grows, etc, etc.
This ain't a classic free market. We frequently see companies become market leaders without ever earning a profit. That's not a classic free market.
Succeeding as a company because you make customers happy sounds nice, but the most powerful companies today succeed by gaining favor from those already in power (venture capitalists, etc), and the customers are just a bargaining chip to be tossed around on the bargaining tables of the wealthy.
That's a good point. Especially when we see so many things where there are exactly two companies competing.
Many monopolies form by first using a dominant market position to sell at a price no competitor can afford to match. Choice has already been removed before the "competition" folds or pulls out of the market. The consequences don't happen overnight; you feel the squeeze before the "true" monopoly emerges. Amazon isn't going to sell at a cheaper price once their competitors go out of business out of the kindness of their hearts.
Further, high consumer price is just one form monopoly power takes. Reduced labor power, wages, and worse working conditions are other important concerns, in addition to removing product variety and innovation incentive.
That's a fair point. Bring loss leader can be a stepping stone on the path to being a "real" monopoly.
Amazon literally did this with diapers.com that led to them acquiring the company and shutting it down. I'm sure they've done it in hundreds of other product spaces as well.
OP didn't say it, but Amazon also forces agreements with sellers not to list same items cheaper elsewhere online which is monopolistic.
I get the nuance you are communicating though.
Just because they are the cheapest option doesn't mean they aren't a monopoly. They clearly have the most inventory. One store having all of the inventory of everything and being the leader for selling products of any kind, is a pretty big problem.
If they can put others out of business (pretty sure they have put smaller stores out of business in the past), they can become an even bigger monopoly.
"A monopoly is a market structure with a single seller or producer that assumes a dominant position in an industry or a sector. Monopolies are discouraged in free-market economies because they stifle competition, limit consumer substitutes, and thus, limit consumer choice." ~investopedia
Nothing about needing to jack prices up. I'd say Amazon fits the description perfectly
I am no economist, but don't you think this behaviour of Amazon leads to "carrot and stick" and at that point it is basically a monopoly right?