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more on OECD on employment protective laws
From: David Farber <dave () farber net>
Date: Wed, 26 Apr 2006 16:48:20 -0400

Begin forwarded message:

From: Gerry Faulhaber <gerry-faulhaber () mchsi com>
Date: April 26, 2006 9:44:59 AM EDT
To: John Levine <johnl () iecc com>, dave () farber net
Subject: Re: [IP] more on OECD on employment protective laws

Well, I am all for antitrust enforcement, and we certainly saw a spate of that in the 20th century, an industrial age with highly constrained capital availability. Standard Oil comes to mind (1911) as well as more dubious ones, such as Alcoa and Kodak-Berkey. But the last and biggest IBM case was dropped in 1982, coincident with the successful conclusion of the AT&T case.

We certainly are effective in keeping firms merging to monopoly, but growing to monopoly is not in fact illegal, nor is pricing like a monopolist once you are there. Abusing your monopoly with anticompetitve actions is illegal, and that is what the Microsoft case was all about. And it is not for lack of trying; every businessperson worth a quarter of their salary is trying to obtain a monopoly; as with Microsoft, that monopoly if obtained can be successfully defended (largely) with talented legal staff, so it is not clear that declaring something illegal will in any way abate the urge and action to monopolize (drugs are illegal too, but that doesn't appear to stop people from profiting from them).

However, when everyone is striving to win, to be the monopolist, the paradoxical result is competition. This seems to be the ubiquitous outcome, and it is very good news indeed. Only in countries that support and protect their firms are monopolies widespread, curiously in the name of the public good.

Again I state the challenge: do we see monopolies that have grown to be so purely in the private market?

Professor Gerald R. Faulhaber
Business & Public Policy Dept.
Wharton School, University of Pennsylvania
Philadelphia, PA 19104
Professor of Law
University of Pennsylvania Law School
----- Original Message ----- From: "John Levine" <johnl () iecc com>
To: <dave () farber net>; "Gerry Faulhaber" <gerry-faulhaber () mchsi com>
Sent: Tuesday, April 25, 2006 11:13 AM
Subject: Re: [IP] more on OECD on employment protective laws

Wow, is Nelson's analysis on point.  Once you get past Microsoft, it
is very hard to name a monopoly that arose through purely private

Gosh, do you suppose that has anything to do with the fact that it's
been illegal for a business to act as a monopoly in the US for the
past century, unless it's a government regulated one?  Surely you know
that if you turned the clock back to 1900, you'd be hard pressed to
find a major industry that wasn't dominated by a single large company
or a cartel.

Through the 20th century there were all sorts of anti-trust actions to
break up monopolies.  I can think of at least two just against IBM,
one for punch cards, the other for mainframe software.  With the
glaring and temporary (if the EU has anything to say about it)
exception of Microsoft, all of the non-statutory monopolies in the US
are gone.

John Levine, johnl () iecc com, Primary Perpetrator of "The Internet for Dummies",
Information Superhighwayman wanna-be, http://www.johnlevine.com, Mayor
"More Wiener schnitzel, please", said Tom, revealingly.

PS: Do they still teach business history at Wharton?  There's an awful
lot that happened during the 20th century that's directly relevant to
what's going on now, if only people knew about it.

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