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Originally Posted by mrfrisky
Nice to see your missing a lot of my points by sticking to the "old" thinking. Other then that please dont put words in my mouth either.
May i give you another example of when competition can be bad for consumers?
In the netherlands we have a couple of banking institutions. Abn Amro, Rabo, DSB, etc.
Abn Amro and Rabo are charging a higher fee. DSB came in years later, and hate fees that couldnt be resisted that low. Low fee, high interest. Everybody cheered and sucked the directors dick because: "Here comes the competition, competition is ALWAYS good, its economics 101!!".
A LOT of people went there, i mean, people that are in what we call the "quote 500", which means they are amongts the richest people here in Holland.
Then last year, it all collapsed. Bad bad management. Low fees high penalties, and the bank collapsed taking away hundreds of millions of dollars of ALL the people that had a bankaccount there. Hundreds of people lost their jobs. Millionairs went broke in a day.
Was it good for the competition? Was it good for consumers? It looked like that from the beginning, but was it really at the end?
Its just how you define competition.
In an equal market, delivering the exact same services (or a little more) for a lower fee would be good for competition. The statement about monopolies i agree with. And im not trying to win a debate either. This debate has been around since someone invented the word economy. Google it, must be something that may interest you.
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It's just how you define competition? Really?
Merriam-Webster defines competition in business as "the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms".[2]. It was described by Adam Smith in The Wealth of Nations (1776) and later economists as allocating productive resources to their most highly-valued uses.[2] and encouraging efficiency. Later microeconomics theory distinguished between perfect competition and imperfect competition, concluding that with the no system of resource allocation is more efficient than perfect competition. Competition, according to the theory, causes commercial firms to develop new products, services and technologies, which would give consumers greater selection and better products. The greater selection typically causes lower prices for the products, compared to what the price would be if there was no competition (monopoly) or little competition (oligopoly).
I didn't miss your point. Having a particular company (or competitor) who performs poorly for whatever reason doesn't negate the need for competition nor make competition bad. That's akin to throwing the baby out with the bath water. Or if you prefer: one bad apple doesn't spoil the whole barrel. Pick up an economics text somewhere. Anywhere. Keynes, Friedman, Smith, doesn't matter. There's a reason their views on economics have won Nobel prizes and continue to be taught in universities. Competition is a good thing for the market, always. It doesn't guarantee there won't be poor performers or other mishaps, it guarantees innovation, more customer choices and better services at lower rates. It does NOT guarantee freedom from problems.
Let's take your example about the Dutch bank that went under. What if that was the ONLY bank available and it crashed? How would THAT situation have worked out for people? Are you picking up what I'm putting down yet?
It's not a matter of saying don't do your due diligence inspecting which baskets to put your eggs in. That's a given. Even the strongest basket can break under the right circumstances. That's why you pick as many as make sense.
There are two strong IPSP billing companies out there right now. Having more would be better for the industry, not worse. Having more competition will lower prices for the consumers and provide an even better product. Again, to refute these economic principles is to rewrite the science of economics. If you're able to do that successfully my hat's off to you and congratulations on your forthcoming Nobel Prize.