Tuesday 30 October 2018

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Via Duck Soup, we’re served a nice demystification of a free market fairy tale—that of preference and predatory capitalism. It’s well established that once a chain operation moves into a market, if local, established businesses cannot compete, they’ll eventually be edged out by dint of inefficiencies and although the community may mourn the loss of one of its anchors, customers will ultimately be better served by the franchise.
It’s a bit of cold comfort and consolation but what it relies on illusion preference (the symbols above are shorthand in that field of study for equivalence and strong preference) that predicates the narrative on flattening out all companies as entrepreneurs running lemonade stands—which is vastly far off from the case of a local shop competing with a multinational corporation. This scenario reminds me of monopsony—the big company will necessarily enjoy much larger margins for profit because it has great purchasing power for supplies, advertising and even recruiting labour. The big corporation does not even necessarily need to undercut the competition, charging the same or even more for a comparable good or service or attract and retain loyal patrons, but magnitude will eventually prevail—that is, until people and governments are disabused of the myth of the Invisible Hand that belies its appeal.