[net.politics] cartels and self interest

trc@houti.UUCP (06/11/83)

Response to a reply to my reply to Jeff Myers' reply to my original article(!):

I understand you to be saying that, you accept that businesses can
hurt their long range self interest by trying to fix prices, but they
hurt others in the process.  Further, you state that such actions would
often be taken, if not for anti-trust laws and such, and that the result 
of such actions is to keep high profit margins.

I have no statistical evidence showing whether corporations hurt others more
or less (on the long term average) with cartels and such.  But I can point
out two things.  A price fixing cartel encourages more competitors, so that
when the cartel eventually breaks, prices are likely to be cut to a bare
minimum - probably lower than the original competitors would have charged.
Secondly, if some of the competitors go out of business, their stockholders
lose money.  Where does that money go?  Since profits are being cut to the 
bone, it mostly goes to customers in the form of reduced prices.  And it
seems to me that protection of the consumer interests was what motivated
anti-trust laws in the first place.

Anti-trust laws have the negative impact that they constrain businesses
where they do not need to be constrained.  We all pay the price for the
anti-trust laws in higher prices, and lower quality.  The recent difficulty
with allowing corporations to collaborate on basic AI research is only the
latest example.  When a law is wrong in principle, even if it "works", it
will have effects that are bigger and worse than its intended primary effect.


	Tom Craver
	houti!trc