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The best place to start is getting rid of all the anticompetitive policies that arbitrarily enhance monopoly power.
Once we have a better look at what markets are actually pushing towards we can see what actual problems might exist.
Do we know what those anticompetitive policies are though? I'm somewhat sympathetic to this idea that we're gonna get more market concentration naturally even without any specific anticompetitive government policy.
There will be a lot sector specific things that I’m unfamiliar with, but the general form they take are costs that small businesses can’t afford.
If you want to employ more than 50 people (I think that’s the general cutoff), you suddenly need an entire HR department and other compliance personnel to make sure you’re within the mountain of red tape that federal, state, and local agencies have spewed out.
Larger employers can get better deals on the employee health insurance they’re required to offer.
Minimum wage laws remove the possibility of competing on non-monetary dimensions, like better work environment.
Occupational licenses keep freelancers from just hopping into the arena.
There are building and parking requirements that are more costly for startups to meet.
Many places prohibit operating a business out of your residence.
Loosely related: Somehow all the mom-and-pops got shutdown during COVID, while the big box stores stayed open. I have no idea what justified that but it made it pretty obvious who’s daddy’s favorite.
Yeah, one of the most ironic things about progressives is that they hate big business but the mountains of red tape they impose make it so that only big businesses can survive.
Which reminds me that there’s also the labyrinth of tax credits, deductions, grants, and other subsidies that are much easier for big businesses to optimize because they can afford the experts who know where all the goodies are.
phones are a pretty good example: there really isn't any widespread device manufacturer that poses a risk to the iphone-android duopoly (it's a little messy because android runs on lots of different manufacturer's devices, but there is something that leads to the two app stores dominance).
Will it take regulation to change this? Or will regulation just distort the market even worse, actually hindering the emergence of a third option?
I can certainly see a world where the market doesn't fix this problem.
I can certainly see a world where the market doesn't fix this problem.
Same. Though we also have to distinguish between long-run and short-run. If the duopoly becomes too shitty, they'll still maintain dominance in the short-run, but in the long-run a better alternative is likely to emerge.
The level of their enshittification also depends on the viability of alternatives. If viable alternatives exist, even if they're niche, it could prevent the duopoly from becoming too crappy.
I think he does make an interesting point.
In the economic theory of monopolies, extreme economies of scale gives rise to monopoly power because the largest producer becomes the most efficient one. Smaller shops can't compete.
So Vitalik is saying that technologies enhance economies of scale, thus giving rise to more natural monopolies across all sectors, including enhancing the power of big government. I think it's a reasonable hypothesis.
That being said, another key piece of economic theory is that the threat of alternatives serves to constrain monopoly power. So to me the best way to combat the growing threat of monopoly is to make viable alternatives. I think this goes hand in hand with Vitalik's interoperability argument.
The question, as always, is how do you fund viable alternatives when the fixed cost of development is high? On one hand, we could trust the market. If the demand for an alternative is high enough, trust the market to develop them. Even if they never become big or mainstream, their presence may be enough to deter monopoly power. Another approach is more heavy handed, requiring the big players to follow open standards and to publish their documents and tech specs that would allow the development of alternatives more feasible.
I'm not sure which I support, but I think I lean towards the "right to repair" philosophy of requiring companies to make information more accessible to allow third parties to develop tools and upgrades for their products.