View Single Post
Old
09-17-2004, 10:07 AM
  #44
kurt
the last emperor
 
kurt's Avatar
 
Join Date: Sep 2004
Location: Victoria
Country: Canada
Posts: 6,446
vCash: 400
collusion

Quote:
Originally Posted by joechip
Collusion should not be 'illegal.' If one side can organize why can't the other? Cartelization (or collusion) is a temporary situation that is remedied by either new technology (demand for a complimentary product) or natural competitive forces.
This is also precisely true. The problem is, the time taken for market forces to equalize prices can often be much longer than an individual's lifetime.

For example, a middle-aged OPEC oil baron decides to exercise his power, and artificially hike prices. Sure, this raised price leads to an increase in business opportunity for other nations (Russia, Canada, the list goes on) to begin exploiting their own oil reserves, which were previously too expensive to put to use. Andm as you said, technological development also plays a big part in bringing the market back to normal. In the meantime, this oil baron has earned millions, perhaps billions of dollars, has retired, and no longer cares about the success/failure of the company.

You could also argue that environmental regulations are unnecessary. Free market forces ensure that the environment will not be destroyed, as it would jeopardize businesses' opportunity to gain future revenue. However, again, large industrialists don't care whether or not their company is successful in 200 years.

kurt is offline