"Positive Monopoly vs. Perfect Competition" Topic

Which is better?
Fascinating WSJ op-ed by PayPal head Peter Thiel: link argues that monopolies spur innovation and economic advancement, not "perfect competition." Setting aside political implications (please keep your knees from jerking), this has interesting implications in the wargaming market as well, both in manufacturing and retail aspects. Thiel's examples of the restaurant business certainly apply to the retail side; just as it's not enough to be the only restaurant offering Indian cuisine, it's not enough to be the only store offering historical minis locally. Differentiation doesn't win out in and of itself.

While reading this, I naturally thought of GW, very much a monopoly operator in the market, but also of those trying to innovate ahead of it: Mantic and Warlord come to mind. (Again, restrain knees.) I also thought about local game stores, which once indeed thrived pretty much on a monopoly approach within their own market. One doesn't often think of a Mom & Pop operation being a monopoly, but when they're the only game in town selling games, Mom & Pop become Ma Bell. Internet sales are essentially the innovation that have cracked that monopoly. (To those who balk at thinking of a small FLGS as a monopoly, remember the distinction of Indian cuisine-- your FLGS may have once been the local monopoly on the gaming market, but nowhere near being the monopoly on leisure and hobby spending.)

This article also put me in mind of my own writing efforts. I know my current novel is distinctive in the market, but that distinctiveness alone won't be the key to its success. Harry Potter didn't dominate the market because it was a book about a school for wizards. There have been tons of those. Nor did it win out because it created a "secret" world of magic alongside the modern world. No real innovation there. It won out by combing humor with heart, the silly with the serious, and pursuing the lives of its characters as they grew! rather than the typical series approach of keeping the central characters always at the same age. That was innovative. Have I been innovative in my own approach? I think so, but the jury is still out.

So, back to the industry. Who is innovating towards that "positive monopoly" suggested by Thiel? Who is still stuck in "perfect competition?" How do you break out of the latter and pursue the former? And what innovation will jump past both? (Yeah, if we knew that, we'd be billionaires…)

Open for discussion.
And as I said before, please keep a grip on your knees.

He is making a very basic mistake. Google is not a monopoly, it has the vast majority of market share but to use a competitor is no harder then using google. A monopoly has a lock on a certain market and it is near impossible to use a competitor.

Replace Google with Comcast and you have a closer idea of a Monopoly.

Ah, but he excludes government mandated monopolies, as Comcast is (or at least was) in many areas. By the way, I don't use Comcast, so therefore it is clearly not the monopoly you suggest it is. And using the competitor I use is no harder than using Comcast would be. So I think you'll need to dig deeper for a counterargument. In any case, arguing that he doesn't use the term "monopoly" as you would define it really has no bearing on his point. He gives examples of "monopolistic" status-- Google, PayPal, Apple, Microsoft (until recently), IBM (one time), etc.-- and discusses their prominence and success and/or failures, and the effect of the same on economic and consumer issues. Term them "dominants" if you prefer, but the question is whether his analysis is valid and applicable to the wargaming world.

Arguing in favor of a positive monopoly is a bit like arguing that an enlightened monarchy is the best form of government. Maybe so, but eventually Marcus Aurelius dies and Commodus takes the throne.

Another symptom. A monopoly business might lash out at a different business that threatens to render the monopoly obsolete. Example: Cable businesses are undoubtedly worried about internet content distribution eroding their business model. Lashing out might be to file a complaint with the government or filing a lawsuit. Enough money can potentially carry either of these attacks forward.

So in a sense, the cable company is a monopoly because it is the only cable company in town. However, there is always other ways to get your media content. If you stream, you won't get real time content but you can get on demand video.

Monopolies, especially regulated ones, will use their close relationship with the government to limit competition from even non-close competitors. Which is what Comcast is doing with data-caps and net neutrality run-arounds in regards to Netflix and other streaming media.

I doubt any gaming company will get big enough to use the government to limit competition. While GW is not a monopoly, the miniature gaming market is whats called "monopolistic competition." Anyone can make a miniature wargaming figuring but only GW can make a Space Marine.

If I sound a bit like an economics teacher…guilty as charged. Thanks for the link Parzival, I will use the article in my AP class next week.

> By the way, I don't use Comcast, so therefore it is clearly not the monopoly you suggest it is.

Yes it is. Since people stuck with it have no other choice. A monopoly has never existed for ALL of the world. Excluding a non-government backed Monopoly is a neat little trick – since here in the US it is illegal to have any other kind. So what I'm saying is – his whole argument is null and void. First by excluding the only true monopolies left and second by claiming something is a monopoly when it is not.

Comcast can be considered a land line monopoly. EXCEPT in markets where Verizon offers FIOS. And Verizon ain't coming here.
It has exclusive franchise within that municipality. However in the counties I work it can be right next to Service Electric, Metrocast, Adams, Blue Ridge etc.
Comcast bought out Adelphia, Verto, PRISM etc.

Not much of a monopoly.

However, there is also DISH & DirecTV. You can bundle them with the local phone companies.

Non of those companies are true monopolies
They all have to innovate to stay the biggest in town. As soon as they stop trying to be the best someone will come steal their thunder. A true monopoly wouldn't have to innovate because of they messed up no one else would be waiting in the wings to pounce.

Probably need new terms for:

1: A company that controls the vast majority of the market. Near-monopoly?

The level where the company can essentially dictate things to the market, influence government policy and become viewed as the norm.

Microsoft and Amazon springs to mind.

2: A small mature market with a few powerful competitors that engage in cartel-like behaviour while avoiding the legal definitions, and a mass of small, insignificant competitors that often must rely on the giants to survive.

US cell phone industry springs to mind here.

Old thread, but I can't get past his use of Google as a monopoly, either. Anyone who took basic economics can tell you that his definition of a "monopoly" is a wrong one. Search engines, in fact, are pretty darn close to pure competition: it's free to use, and no search engine is *that* much better than any other. At best, the branding of a search engine suggests monopolistic competition.

Oligopolies and monopolistic competition are more realistic examples. Weasel's #2 definition is close to oligopolies. In monopolistic competition, similar products (eg. toothpaste) purposely differentiate themselves from other similar products (eg. whitening toothpaste vs. tartar control toothpaste).

Depending on the industry, competition can be more wasteful than other models. If you have a hundred companies making the same product, why not reduce the overhead with fewer companies? Certainly monopolistic competition is wasteful -- do we really need a hundred new car models every year, with their own line of car parts? Why are there hundreds of different microwaves on the market? Why should a supermarket devote half an aisle just for toothpaste?