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0 pointsforgetfreeman1y ago0 comments

I think a related thing that many people get confused by is the idea that market forces even exist. It's very rare these days to find industry segments where participants actively compete on quality or price. The whole idea is a holdover from how business was done 40 years ago.

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_DeadFred_1y ago

And with today's investors just buying funds/picking some 'group' on the 401k website, they aren't investing in a company, counting on receiving dividends from the company for the rest of their lives, and therefore forcing the company to be healthy. Instead they are counting on the stock going up short term, something totally different than buying and holding for dividends. And they just keep putting money into the generic pools of XYZ stock fund, again not a specific stock that they then hold accountable for anything. In fact they can't even punish a specific company by selling it's stock, only an entire ETF or 401 fund that the company is buried in.

And then there's dark pools. Trading isn't even done on the market anymore.

maest1y ago

> And then there's dark pools.

This is such a non-sequitor, it undermines your entire post.

dgoldstein01y ago

market forces do exist. But it varies highly from industry to industry and product category to category.

Food: - restaurants definitely compete with each other, mostly in each local area - and within that, different slices of the restaurant business more directly compete, e.g. fast food is more competing with each other than fine dining. - BUT: we have a huge problem with a lack of competition in the supply chain driving prices up for everyone, at least in the US. - Groceries are similarly impacted by supply chain monopolies

Smartphones: high end smartphones are a oligopoly: - Apple vs Samsung vs HTC and several other tech companies producing phones; Apple definitely commands quite a bit of a premium, as do some of the nicer Android phones. But on the whole, the companies really are fighting to one-up each other with better features, battery life, etc. - quality is improving, even if the price is over-charging vs the ideal competitive market. Low end phones are even more fiercely competitive

Other electronic categories seem to show decent market dynamics; headphones, earbuds, usb peripherals, keyboards, etc. all seem very commoditized; there certainly are brands that try to command a bit of a premium based on reputation / marketing, but the cheap options are often good enough and definitely have a very competitive market. Big electronics like GPUs and gaming consoles though I think it's easier to start considering market distortions due to more monopoly power.

Of course there are no shortage of monopolistic practices out there, e.g. for utilities, collusion on rent, online retail (Amazon), textbook prices, medical care & pharmaceuticals, and even more mundane things like frozen potatoes and chicken.

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The thing that bothers me most with the simplistic view that "the market will do it better" is that the whole premise of market forces giving the most efficient price assumes that (a) a commodity is being traded by (b) a large number of buyers and sellers, none of whom have any significant share of the market. Many markets either (a) aren't trading a commodity (e.g. iPhones and Android phones aren't interchangeable so Apple can command a premium price) or (b) have consolidated buying or selling to the point that they don't have the large number of independent buyers or sellers necessary to have the price be set by market dynamics rather than the monopolist or monopsonist. And the people promoting "let the market fix it" either are too dumb to realize that, or more likely are letting their rich friends make a quick buck or want to score political points by promoting smaller government.

animal_spirits1y ago

Market forces do exist. I'm not sure why you think they do not. You are plain incorrect to claim that it is the exception for industries to compete on quality and price, at least in the U.S.

forgetfreemanOP1y ago

How certain are you of your position? There are 3 major mobile telecoms in the country. Their service plans and coverage are roughly comparable. There are a handful of parent corporations that own fast food franchises in the country. Their product offerings and price points are roughly the same and all opportunistically raised prices after supply side disruptions from the pandemic were largely resolved. Most consumer appliances (regardless of brand) are assembled from parts made in the same factory. Similar features, similar life expectancy, similar price. Same with packaged food brands, clothing, furniture, building materials, this list is basically endless, and a product of a few decades of unchecked corporate mergers and acquisitions and the steady march of private equity into just about every market niche in existence.

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