Yes, if a company is underselling to run everyone our of business, then takes control of the market and sets the price, that is BS. Look at Stripes gas stations in corpus. They undersold until they ran everyone out of business/took contol of most of the market (leaving a few other gas stations to not have 100% and be obvious). Then, once they had most of the market share, they jacked up the prices on their concessions. The few small firms followed their lead. The prices of concessions at a Stripes are ridiculously higher than the market. I'll add this is not even just an observation, their management openly brags that their business model was having enough capital to take the hit of below market prices until they could take enough market share to control prices and overcharge. Low prices are not better if they are just temporary to take the market and indefinitely charge higher prices.
Also, an oligopoly may as well be a monopoly. A good example is cable companies and dividing up the market and getting exclusive deals for certain apartments/neighborhoods. Even stripes just having most of the market (enough to control price) and leaving a few token firms
Your biggest assumption is there will always be innovation to thwart a monopoly/oligopoly. That is simply not always the case. One example: diamonds. You also seem to ignore the power of monopolies/oligoplies to thwart competition and the fact that enforcment of anti-trust laws has spurred innovation/competition over the past 100 years.
I have never made the argument that every action by the government was perfect or correct. There have certainly been failures. No law will ever be enforced perfectly. That is not a reason to not have good laws. Some drunk drivers will be caught, others will be ignored. Some jaywalkers will be caught, others will be ignored. However, in general, anti-trust legislation is better than no anti-trust legislation. Some mergers need to be blocked and some actions defined in the Clayton Act that only serve to hurt competition should be policed.
We tried a no sherman/clayton system before. The late 1800s were full of extreme corruption and it did not work. We seem to be returning to that.
Last edited: Jan 15, 2017