[OPE-L] Perelman: consumers lock-in

[Alejandro Agafonow <alejandro_agafonow@xxxxxxxx>]

Dear Michael:

 

M. Perelman on 05/10/2007: I really don't understand what you mean.  Under the old AT&T consumers had little freedom to choose; and when IBM labs were at their peak their customers were often locked in to IBM. These companies faced little competition.

 

I don’t know very much the history of the North American software/hardware or telecommunications markets. When Cockshott and me barely discussed the IBM case, my lack of knowledge about the case mist over the debate. But my theoretical knowledge let me reach relevant conclusions upon certain assumptions.

 

Were the AT&T and IBM situations you describe preceded by a State prohibition of letting competitors to face up to these firms? If this were the case, I would share your opinion about the consumers lock-in.  But if it were not the case, we can expect that soon or later somebody would enter the market and offer an alternative to the consumers. That’s precisely what happened when Apple challenge IBM in the mid 80’s.

 

What could we qua-consumers gain? The speed up of technological change bringing up faster betters goods. Of course, this doesn’t apply to primary goods due to ethical constraints.

 

The absolute or relative natural monopoly situations are not permanent in absence of non-market barriers, but this is something that you certainly know. The issue is that in these pro-competitive situations (including of course an equitable rent distribution and enforceable rules of fair advertisement and competition) market concentration is a consequence of the efficiency of a firm better satisfying consumers’ preferences.

 

Best regards,

Alejandro Agafonow

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