Today's Quote of the Day...
…is from Don Boudreaux and and Burt Folsom’s Fall 1999 Antitrust Bulletin article Microsoft and Standard Oil: Radical Lessons for Antitrust Reform:
It follows that the best available evidence for whether or not a firm enjoys monopoly power is the firm’s own record at satisfying consumer demands: Do real prices in markets in which the firm offers products fall? Does output in these markets expand? Are innovations in these markets regular? If so, the firm is likely not a monopolist. Like Standard Oil, Microsoft does not behave as though it possesses monopoly power. Therefore, we argue that it, in fact, does not possess monopoly power.
JMM: Economists and antitrust lawyers have developed all kinds of statistics and metrics to try and gauge, from an objective point of view, whether or not a firm is in a monopolist position. This is also true in other realms of economic regulation: trying to identify public goods, externalities, perfect compensation, etc etc. In the end, though, our best tool is to observe that which people do. How people behave tells us a lot about the econoomic conditions we are dealing with.