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Great quote on competition

TomF · 2003-03-13 20:33:34

I hope I am not re-posting this quote, but I found it yesterday while surfing and thought it had great meaning for our situation in Ireland even though it refers to the U.S. and the Bell Telephone companies who once had a monopoly there. "It's a tried-and-true principle of economics that companies make investments - not…

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13-03-2003 9:33pm

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TomF

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Join Date: June 2001

Posts: 519

I hope I am not re-posting this quote, but I found it yesterday while surfing and thought it had great meaning for our situation in Ireland even though it refers to the U.S. and the Bell Telephone companies who once had a monopoly there.

"It's a tried-and-true principle of economics that companies make investments - not when they enjoy a protected monopoly or near-monopoly position, as some on the FCC and in Congress seem to think - but when they are being hard-pressed by competitors.

Congress bought the line: Kill off our competitors, and we will be happy to invest. But that approach makes no sense at all economically. Why invest if you have little or no competition?

The Bells' strategy, almost certainly, is to improve their broadband networks only enough to be able to exclude competitors from connecting to them. This is a sensible course. Monopolists always act to limit supply in a market with sustained demand. That way, they can raise prices with impunity - and without making costly investments.

http://www.techcentralstation.com/1051/techwrapper.jsp?PID=1051-250&CID=1051-031103C

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