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0 pointsXdes12y ago0 comments

If a monopoly raises the price too high then the consumer will seek a substitute or simply not purchase the good. This is true regardless of the form of the monopoly.

1) If rent is too high then renters will leave.

2) If an automobile is too expensive then consumers will use mass transit or carpool.

3) If there is a coal shortage due to labor conditions then consumers will use natural gas or other alternative sources of energy.

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5 comments · 3 top-level

seanmcdirmid12y ago· 2 in thread

This is simplistic: there are not always viable alternatives, even in a free market.

1) Rent is too high, where do I go? Do I leave my job to live in the country side without one?

2) Public transportation has to exist to be an alternative to the automobile, and often requires public intervention to be viable.

3) Did someone build the pipelines necessary for gas to reach my house? Does the same company own both coal and gas supplies? How do I keep from freezing to death this winter?

XdesOP12y ago

1) You move where the cost of travelling to your job doesn't outweight the savings from lower rent.

2) There is more than public transit such as van pools, bicycles, motorcycles, and trains.

3) There are several way to produce energy to heat a house (electricity, natural gas, wood burning stove).

seanmcdirmid12y ago

1) Ah, so its a constraint optimization problem where a solution is guaranteed to exist? This sounds more than a bit optimistic.

2) You must live in a first-world country.

3) I know this first hand living in Beijing, part of the reason we have seriously bad pollution in the winter is because all the farmers in the surrounding Hebei country side burning whatever to stay warm.

huxley12y ago

"It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." -- Richard P. Feynman

Your hypothesis doesn't take into account the complexities of people's lives which often overwhelm simple economic models.

1. 26.4% of all US renters spend over 50% their income on rent. The most commonly agreed-upon sustainable percentages are between 25-33%.

2. Sadly, there doesn't appear to be much correlation between the cost of transportation (car purchase, gasoline, car maintenance) and mass transit/car pooling increases. In North America, the idea of status being linked to the automobile is a strong counterincentive to mass transit/car pooling. People would rather be poorer than to be thought as too poor to drive.

3. Switching from one fuel to another is not a simple choice for homeowners, you need to switch your furnace (which may be tied to a long-term contract with the fuel supplier), you need to have a local supplier, and you will inevitably face the fact that as demand in the new fuel increases, so will its price.

leot12y ago

What, precisely, do you want your economic system to do for you? What does everyone, speaking openly, attest to when speaking of their common economic goals? Once you've answered those questions, on what time scale would you like those goals to be realized? The "long run" won't cut it, because there's no such thing (and because in any case, the universe won't stand still and wait for the system to reach equilibrium).

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