Wednesday, July 23, 2008

Fierce Competition Is Usually The Best Regulator

Yes, the Sirius-XM merger would create a “monopoly” in satellite radio, but a merged Sirius-XM will still face fierce competition. AM and FM radio, podcasts, mp3 players, and cell phone programming all compete against satellite radio for listeners. In the future, mobile Internet radio with programmable stations could easily threaten satellite radio, which is not programmable.

“Regulation” by competition, not by the FCC and DoJ, is what is needed.

From
Competitive Enterprise Institute, via Cafe Hayek.

MP: Remember that "competition breeds competence."

8 Comments:

At 7/23/2008 9:31 AM, Blogger Matt S said...

depends on which end.
competition obviously is great, but it seems that many companies (probably not in the case of these two) cut employee wages/benefits and other costs to stay competitive. Also, to stay competitive many companies lobby (or bribe) congress to subsidize them or lower their taxes.
I'm for letting competitors do their thing, but a free-for-all would not work.

Also, I remember reading once that in Wealth of Nations, Adam Smith actually takes some time to suggest that though there is an invisible hand and such, we still should take care of one another. Is this somewhat true? I haven't the time to read WoN yet on top of all the other books I should be reading (I did read about him in some 'notable economists and their ideas' book in AP US History, though).

finally, Prof Perry, a link for you:
http://tinyurl.com/588yz2

in the WSJ, richest Americans see their income share grow with a tax rate that doesn't quite keep pace.

 
At 7/23/2008 10:06 AM, Blogger Colm O'Connor said...

Wrong. This demonstrates very poor economic judgment.

Competition is least effective when the goods are not "fungible". In the case of satellite radio and AM and FM radio they are not. MP3 players even less so.

The same argument is made about trains and cars competing. But the goods are not alike enough for them to compete properly.

So the merger does make it a monopoly of a kind.

Regulation is frequently necessary in order to enhance competition and prevent gouging in the case of monopolies.

 
At 7/23/2008 10:21 AM, Anonymous Anonymous said...

"Regulation by competition, not by the FCC and DoJ, is what is needed".

Agreed, but if the FCC is doling out a very limited number of bands in this spectrum, isn't this in effect limiting competition? In such a case, I think we need some rules about not allowing 1 player to control the entire spectrum so that we can have true competition. And I'm talking about competition for satellite radio listeners, not iPods, cell phones, etc. which do compete for our leisure time - but this is not the same as direct competition.

 
At 7/23/2008 10:48 AM, Blogger juandos said...

"it seems that many companies (probably not in the case of these two) cut employee wages/benefits and other costs to stay competitive"...

And the problem with that matt s is what?

Should the company and the stockholders lose money by keeping on the extra added expense of what the company perceives to be unecessary employess?

I note that the WSJ story says this: "The group's share of the tax burden has risen, though not as quickly as its share of income"...

So what? Aren't the richest not being punished enough to suit your tastes for being successful matt s?

"if the FCC is doling out a very limited number of bands in this spectrum, isn't this in effect limiting competition?"...

Well anon @ 10:21 AM, maybe the FCC shouldn't be in the business of doling out frequencies in the first place...

Where is their Constitutional charter to do that sort of work or for their very existence anyway?

 
At 7/23/2008 2:36 PM, Anonymous radioman said...

"maybe the FCC shouldn't be in the business of doling out frequencies in the first place..."

Ok, but who should? Clearly we can't have a radio-wave free-for-all. It would suck.

 
At 7/23/2008 3:02 PM, Blogger Shawn said...

radioman: we don't know. but there are millions of other things that get allocated quite well, and rights are enforced/enforceable. It isn't unthinkable to foresee a situation where people purchase rights to the spectrum, and then have the ability of suing anyone encroaching on their territory.

 
At 7/25/2008 12:06 PM, Blogger OBloodyHell said...

> many companies (probably not in the case of these two) cut employee wages/benefits and other costs to stay competitive.

In which case, if other companies are paying more, they will leave and find work elsewhere. So they can't cut wages if they aren't already overpaying people in the first place.

Freedom: Like every good idea, it does have its good and bad points.

 
At 7/25/2008 12:14 PM, Blogger OBloodyHell said...

> n the case of satellite radio and AM and FM radio they are not. MP3 players even less so.

LOL, the notion is ludicrous.

a) Why pay constantly for music when you can pay once and never have to pay again?

b) Why pay for music when you are limited in your ability to receive it? (i.e., try and get your sat radio in a tunnel or in the middle of a large building)

The only reason, really, for having sat radio is because of the kind of content which is not available via fixed sources -- i.e., talk radio (Howard Stern, Laura Ingram, Coast-to-Coast, ESPN Sportstalk, whatever) -- and the best delivery mechanism (which isn't perfected just yet) is via broadband internet. Once you have that everywhere, without localized switching problems (i.e., some companies restrict access to internet radio, youtube, and the like, due to bandwidth demands) -- give it another 10 years -- Sat radio will cease to exist.

Once you have cell-phone services (and, from that, internet services) without "holes" in coverage, the justifications for sat radio will fade quickly.

 

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