One of the prominent concepts we've learned so far throughout this course is that competition is healthy for the economy. The Sherman Antitrust Act of 1890 was passed to prevent price-fixing which can enable firms within an oligopoly market to form a cartel and act as a monopoly.
The market of wireless providers could definitely be considered an oligopoly. An oligopoly is characterized by a few number of firms offering identical or similar products. Right now there are four top wireless providers: Verizon, AT&T, Sprint Nextel, and T-Mobile who dominate a majority of the market. Obviously these companies have not formed a cartel, primarily because it is against the law. But another reason I think is just as significant is the fact that they are also competing with self-interest in mind. Each have different offers and utilize various forms of bundling, while trying to offer the best deal while making the most profit.
If AT&T would have been allowed to merge with T-Mobile, the number of governing providers would have dropped down to three, pushing the industry ever closer to monopolostic status. Personally, I like having options when choosing who to patronize when it comes to a wireless provider. I hold in high regard the ability to have a choice; to weigh the pros and cons of a business especially when I'm going to sign a contract with them.
This being said I do support antitrust laws and goverment intervention in preventing monopolistic behavior in firms. But I think it's a tough battle. The driving force behind business is success, profit, and being number one in the industry in which you are competiting. Big companies often do this by acquiring their competition, reassuring their leadership status in the market. But "Big Business" does need to be kept in check to assure that consumers have choices and aren't forced to pay outrageous prices.
Nothing about chapter seventeen was very unclear, but I found the chapter interesting - in particular game theory and the prisoners' dilemma. With the visual of the decision box, it is interesting to see how two competitors choices affect both them and their competition. If one acts out of self-interest and the other does not, then the selfish firm comes out on top. If they both act out of self-interest, they are both at a mediocre standpoint, but if they both cooperate the result is most profitable for both.
That's all for now....
Ciao!
No comments:
Post a Comment