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North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical Re: Allocation of IP Addresses
Paul Ferguson writes: > At 12:45 PM 3/14/96 -0500, Perry E. Metzger wrote: > >In any case, so what? Economic allocation of resources is, if > >anything, more important when there is significant scarcity. > > This also creates monopolies where, if this were to occur, would > give Uncle Sugar plenty of reason to step in and arbitrate and/or > reallocate. I hate to argue politics, but you are imposing it upon me. Monopolies are a chimera, a myth. Almost all monopolies that last for more than a couple of years have been the result of government regulation preventing market entry -- AT&T being a shining example. U.S. Steel was formed as a way of eliminating competition in the steel industry by merging all the major players. Within a few years, it had lost some outrageous portion of the market, and without government intervention. Standard Oil was rapidly losing market share when it was broken up. J.P. Morgan and friends never succeeded in keeping a railroad cartel together for more than a month or two before they thought up the Interstate Commerce Commission as a way of enforcing cartel agreements by having the government enforce railroad rates. (This latter bit is not a joke -- almost all government regulation of this sort started to the benefit of monopolists.) OPEC, the great oil cartel, exists outside of all government regulation of its activities. Today, even though its members still control world oil production, OPEC is almost toothless and oil prices in real dollars are lower than they were when OPEC first asserted itself. There have been a few instances of monopolies, but almost always because a particular company was operating extremely efficiently and with very low profitability -- these monopolies have almost always died as soon as either of those conditions changed. I can direct you to dozens of books on this subject if you wish. None of this should be surprising. Monopolies and cartels exist in an unstable position in the economic realm. They are like highly energetic highly reactive compounds in the chemical world -- if you sit atop a high energy curve without much needed to kick you off, you don't exist for long. If you examine where monopolies sit on the supply/demand curve, if they are to make maximal profit they inevitably end up producing an unserved section of the demand curve that will mean a potential profit for a lower cost distributor. In cartels, "cheating" is always a winning strategy for a cartel maker because large profits are made by selling more than is allocated by the cartel -- at least for a while. These creatures, monopolies and cartels, fly apart very fast once someone senses how vulnerable they are. In short, the entire monopoly dragon is a myth created by friends of government regulation to promote regulation. One might as well worry about the sky falling. Perry
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