Comment by jbjbjbjb
4 years ago
Do you feel like this article is straining at bringing monopolies into the explanation? I think the “commoditise your complements” holds regardless of whether the business is, or wants to be, a monopoly. Joel’s article and the Hal Varian work don’t seem to be talking about monopolies. (Caveat: I didn’t read all the sources in detail)
Things work in similar ways however the market is organized. But a monopoly will have a much easier time extracting value from the activity than companies in a competitive market.
Except that the definition of monopoly power is that the company is facing a downward sloping demand curve and that it is operating on the elastic portion of it.
In general, that provides an incentive for other firms to produce a close substitute at a slightly lower price and eat away at your profits unless the government is there to stop them. Monopoly power cannot be sustained without government intervention. In addition, monopoly pricing incentivizes consumers to look for substitutes.
If you look in real life, you will see that monopoly power is sustained through restrictions on who can sell stuff and from whom you are allowed to buy.
> Monopoly power cannot be sustained without government intervention.
Hum... Monopoly power cannot be sustained without barriers to enter. There's nothing saying that those barriers must come from a government. There are plenty of examples where they do, and also plenty where they don't.
Anyway, I don't see how any of that is an except to my earlier point.
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