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Date: Thu, 8 Oct 1998 17:21:26 -0500 From: Petro <petro@playboy.com> Subject: RE: GPL & commercial software, the critical distinction (fwd)

He is right--to an extent. Monopolies _can_ exist in a free market under 2 conditions: 1) Early stages of a market, when the creator/initial entrant has a lead on the competition. This will (without "government" intervention) end at some point unless:

Actualy, without a copyright or some similar 3rd party regulatory intervention this is one of the points in a market development when a monopoly *can't* develop. At this stage of the game the entry cost is minimal and many potential groups have access to the necessary commodities (real and intellectual) to get into the business. This also happens to be when violence has the highest pay-off in staying in the market. It's the strategy of the business that determines if it can *stay* in the market. To put it in terms capable of modelling, consider a petri dish with various bacteria arranged around it. To start, no colony of any particular type (comparable to business strategy) controls the entire surface of the ager. Only after the market matures and competition begins to reduce the number of colonies and the area of the colonies increases do we begin to see a monopolization effect. This is modelled quite simply with cellular automatons. At this point in time what happens in a real-world business is that somebody gets a bright idea. He acts on that idea and starts a business. In order for that business to grow and prosper at some point employees must be hired. Those employees learn the business and some point one or more decide that since there are more people wanting widgets than there are widgets being made it looks like a good time to quit. That ex-employee starts up a company. The original employer has no way to prevent this short of overt violence, no laws or protective agents have been violated because there is no 3rd party to act as guarantor to the employment contract or the intellectual property rights. Now we have two companies making widgets. These products are consumed and resupplied at a profit and both companies (it is easy to extend this to n-parties so I'll stay with two for brevity) continue to grow until market saturation. Now some folks will claim the employer can impliment a limited access policy to the technology and product. This strategy will not work. As another potential supplier I put out an add asking for anybody who *used* to work in that industry to come by for a job. I hire them, drain their brain, and impliment my competitors system. Once the market saturates there isn't enough 'spare' money floating around to stay in business, hence new businesses in that field don't start up unless another fails unexpectedly; if its expected other competitors will begin bidding economicaly for those potential new customers. The existing employers are always trying to hire their competitors so there is a constant motivation to defect from the employees perspective (ala computer industry). Imagine the impact of these sorts of dynamics on banks and the issuance of effective currencies and how that impacts travel and at-a-distance business (such as across the big pond). Even such technologies as e$ won't solve this problem because for one variety to have a chance at the market it must be widely respected, implying a very large share of the market approaching mono-e$ token saturation. So we create a monopoly in our rush to eliminate monopolies via technology. Monopolies are a function of doing business and not any political or mathematics aspect. It's axiomatic in nature. Monopolies themselves, something we haven't even touched on, have both positive and negative characteristics. These characteristics can in fact be described to a very good degree of precision. Now if there were a mechanism to move a more rational and experience based set of laws and regulations into business then we might make some progress toward creating a society (due to moderated market activity - by a *impartial* 3rd party) where investment in technology and its application toward automation creates a situation where everyone invests a sufficient amount of income to retire in a very small number of years. Another point to be made is at no time have I required these various inter-active producers and consumers to be in lock step or have been created at the same time. Nor do they, in principle or practice, have a requirement for such things as instant market change propogation and rational participants, etc. Those issues are irrelevant except early in human history when these sorts of issues are intitialy introduced into a culture. If people can't fulfill one desire, they'll fulfill another. The result is that the same base set of human emotions and desires, expressed through a cultures bias, that varies widely in content, context, and expression, will in fact find a way to express the same basic sets. What most economists do is vastly underestimate the range of that those individual members. The major short-fall with anarchistic or free-market models is that they have faulty comprehension of a workable concept of a contract. This contract represents a major constituent of what holds any society (which I believe we'll all agree is a requirement for an economy) which is trust in the other members, that they will do what is expected at the right time. In these sorts of 2-party systems there can't be an expectable set of reactions. The contract exists from the time the consumer approaches the producer asking for a price, till the time the consumer has taken possession of the object of desire and the producer has their money. At that point, there is no warranty, no 3rd party to enforce any sort of liability, etc. Because of this the business world is best described by caviat emptor. You bought what you got. Now consider the Prisoners Delima, under what conditions does a prisoner go along with the jailer, or tries to escape (not play by the rules, whatever they may be - in this case the contract between the parties). The maximal payback for the prisoner is to go along until the jailer is lulled into a false sense of security. And then defect. This is wired into human genes, everybody does it because that is how we survive as a group in the wild. People as a whole and as individuals don't mind stretching the rules, it's just a question of what rules and how far.

B) a competitor emerges that manages to meet the entire markets desires for goods and services in such a way that profits are so thin as to not attract competion.

Not *a competitor*, only that the total number of competitors in a given market can and do meet the market needs. At this point the growth rates of the individual business strategies begin to emerge and high efficiency and long-lived strategies begin to gain the upper-hand. As time goes by businesses either die and are replaced by consumption or else they merge to create a new structure. The major featues of that structure are that it has potential for long-lived behaviour and it reduces the management overhead, and potentialy the work force requirements (but that's icing on the cake). At that point there will be a merge because both sets of competitors want to make more money, that is their sole reason for existance.

(1) can be effectively ignored, it is a localized (in time) condition that the market will usually remedy.

Is a totaly false conjecture not born out by history or theory.

I have maintained that Monopolies in ANY market large enough to accept competition (i.e. larger than one or two purchasers) cannot continue to exist (in fact would have a hard time coming into existence) without some sort of government influence.

And I have yet to see an explanation expressed in market dynamics that describes how this supposed process works. Phloegestron and ether were great ideas until somebody tried to measure them... Whew. I've about had my fill of this topic for the time being.... Adios mi amigos! ____________________________________________________________________ To know what is right and not to do it is the worst cowardice. Confucius The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------