Tyndmyr wrote:I notice you've switched from talking about farmers to talking about retailers.
My understanding was that farms were just an example, and you're claiming bargaining power differences do not matter and that large organizations are generally preferred by the markets because they are actually more efficient, while talking about monopolies in general.
You would probably claim that it actually is more efficient to produce in China and ship here, rather than produce in-country and ship locally and that the reason it's cheaper has nothing to do with bargaining power differences.
Producing locally is usually less efficient. China isn't special in this regard, but yeah, specialization and trade usually is more efficient than doing everything locally.
No one has made claims to the contrary. I've said that where the property lines are drawn have nothing to do with how to best use the land, and that a hundred small farms should be able to act identically to if they were one large farm.
That is incorrect.
The small farm and the large farm will get the same price at the grain elevator(assuming equal quality, same crop, etc). Bargaining power is provably irrelevant. Therefore, bargaining power cannot explain farm consolidation.
A hundred small farms do act differently than one large farm. You can organize them into a collective to do so, but the overhead of organization puts you at a disadvantage.
Thesh wrote:You attribute this all to efficiency, to completely dismiss that the legal structure is more important here than the actual efficiency of the company. The property laws that allow Walmart and Amazon to not have to pay anyone else for the warehouses, while any other retailer has to pay profits to someone else for the rental value of the land itself. That lack of a need to pay rent or a loan itself represents a bargaining power difference, the other profits paid to the third party warehouse represent a bargaining power difference, the lower price purchased represent a bargaining power difference, and if Walmart wants there are a million ways to use their influence to squeeze them out of the supply line. It's about not having to deal with everyone trying to screw you at every single instant, until it's better to just let them buy you out.
It seems you're attempting to redefine bargaining power to mean just about everything.
A small business buying from another small business does not involve rent. Both businesses can own their own property. Even so, they are likely to be outperformed by a large business.
Thesh wrote:It's not just about whether there are other places that sell retail stuff; it's about the products on the shelves; this is especially important if you are a manufacturer. For a lot of products in a lot of areas Walmart does lack competition, and the influence they have is huge. They can largely decide winners and losers in industries. If every single store can decide independently whether to carry a product, they have a lot less power than if a single entity can make the decisions for everyone, and this has nothing to do with economies of scale. When it comes to a place like Walmart, people are going there for "pool toys". It doesn't fucking matter what pool toy you sell, how good it is, what pool toys other people sell. Your noodle might be better than the other noodle, but their customer's don't give a shit. Either you keep on Walmart, or your company is dead.
That's merely one business strategy. Many companies are doing quite well, despite not selling through Walmart. Shit, many have considered pursuing such mass market strategies to be a grave error. Being seen in Walmart can devalue a brand, as people consider it to be cheap junk.
Walmart does not monopolize the retail market. They're a big player, sure. You do not have to deal with them, though.
Tyndmyr wrote:If, as you say, this is inevitable, and consolidation never has an upper limit, then why hasn't it already gotten down to that end state? Farming isn't new. Why has it not already transpired?
History is open to the public. A lot of government money goes into keeping small farms afloat. There are also regulations protecting against monopolies.
The vast majority of farm subsidies go to factory farms, not to small farms.
Anti-monopoly regulation is utterly meaningless on the scale of family farm consolidation. Nobody has to file an SEC report in order to buy the neighboring farm.
SecondTalon wrote:How do you think crop farming works? Like, in a collective where - even on geographically separated land - people shared their resources and supplies, outside of emergencies like a literal fire right now, you’re not going to run in to a situation that you don’t have days if not weeks to plan for, with the discussion of what is being planted where happening months in advance, if not a calendar year or two. Lots of farmers run on crop rotations where they can tell you what fields and, barring bizarre weather, what two weeks they’ll be planting a specific crop five years in advance.
Invasive parasites, fungus, and so on? Drought, flood, wind? You follow the news and know a few days if not more for weather, and often just watch the fungus march across a continent, wondering if it’ll be stopped before it gets to you.
There’s a lot of decisions you don’t make because you made them four months ago when you decided to plant X, and you decided on X eight months before that.
My point being that - outside a literal fire - there’s no situation where you need the tractor right now but can’t use it because it’s three fields away. You just wait two days and get it then. No big deal. And in the case of literal fire... the tractor’s probably already on it’s way, and so’s the Fire Department that all those taxes go towards.
It doesn't require a complete disaster for it to be less efficient.
It merely requires that more effort need to be invested. Sure, they absolutely can make a schedule, and they can communicate to adjust in a reasonable time frame for most occurrences. However, the fact that such communication must exist is the overhead. The solo farmer doesn't need it. It isn't a matter of "you can't use the tractor".
As an aside, harvests can be extremely time sensitive. It's not fundamental to my point, but some crops have fairly little flexibility regarding harvest times.
Kit. wrote: Tyndmyr wrote: Kit. wrote:
Tyndmyr wrote:"It is a free market which makes monopolies impossible", after all.
I think it is a common misconception. "Free market" is not a stable macroeconomic structure, but an idealized state of the market conditions. "No monopolies" is not a consequence of this state, but an a prerequisite to it. So far, at least to me, it looks like - on finite-sized markets - it is an unstable state, and will degrade to monopolies and/or to a systemic intervention from non-market forces.
This hasn't happened with say, farming.
Kinda illustrates my point. Couldn't you find a less heavily regulated and less heavily subsidized market (government subsidies to consumers and producers amount to more than a quarter
of the size of the US agriculture market) as your example of "free market"?
There's a lot of regulation and subsidies for pretty much every mature market currently. I thought about energy, but trying to pitch oil as unaffected by regulations and subsidies would be laughable. Minerals? *looks at tariffs and such* The most free markets are usually the ones that have just opened up, as regulation tends to increase over time. However, while developing markets are diverse, that is so largely because they are developing markets. It'd be unfair to rely on that as an example for mature markets.
Tyndmyr wrote:There is consolidation, to be sure. A mature market is likely to have a handful of players, where as an emerging market may have a large variety of small players.
Consolidation appears to hit it's limit at a few large generalists, and a handful of specialists in many cases. It's difficult to find cases of monopolization without regulatory capture.
Looks to me that it's government intervention
that limits it.
The original study drew from such disparate places as typical mall layouts, which also tend to adhere to the rule of three. I don't think those are due to government intervention.
Such a limit does not follow from the free market state alone. Monopolies are more efficient (in the short run) due to the economies of scale, and it is more beneficial for the owners of a handful of well-established players to merge their companies together than to waste resources on advertising against each other.
Regulatory capture is a failure mode, and it is actually easier to cause when the government is small (which is what libertarians advocate).
Economies of scale often have ceilings. The tractor is a good example here. The tractor can cover a lot of ground, but there's a ceiling beyond which you need a second tractor and driver. At that point, it doesn't matter a great deal if one of the drivers is in charge of the other. Both are independently driving a tractor and covering ground, there's not really any efficiency gain to be had. So, if you have a bunch of farmers with a bunch of tractors, and they all have to organize for some reason, they're probably losing efficiency to communication at that point.
In this respect I view the rule of three as a guideline. If a market is sufficiently small/niche, it may be that a single player can dominate before exhausting available economies of scale. The larger the market, the less probable this is.
I agree that a small government alone is not enough to prevent regulatory capture. It's a hard problem. After all, the US historically had a small government, and it definitely involved itself in such affairs many times. Smaller is desirable for efficiency reasons, but it's not a panacea.
Tyndmyr wrote:but the biggest reason for monopolization appears to be government.
I don't see how. Monopolization appears to be a natural result of evolution of a system started in a "free market" state, and the government itself is such a result of monopolization of "free market" judiciary services.
Nah, the government is a monopolization of violence. A government doesn't arise and fall based on it's judiciary, it does so mostly based on who can forcibly kick it out. If we'd not managed to win the revolution, our history would have played out quite differently. Guns, not jurors determine this outcome.
When one relies on force rather than markets, there is almost invariably only one winner. One government ends up dominating any given chunk of land.
Tyndmyr wrote:If it's flat out impossible or not is a cause for some debate, but ultimately, that seems to be mostly theoretical. Pretty much everyone is on board with monopolies being bad, so banning them isn't really a problem.
I don't agree.
First, monopolies might be "bad for...", but they are not inherently bad (as in "evil"). Moreover, by banning monopolies you are limiting choices.
Second, there is no objective criteria for being or not being a monopoly. You are going to give the government the right to decide whom to ban for being the most successful
in competition against others, and that doesn't look like free market to me.
So, you're pro monopoly? You believe the natural outcome of every market is a monopoly, and you're after that outcome?
If you have only a single seller for a given market, you have a monopoly. That seems objective to me.