The Free Market: Competition, Monopolies, and the Dynamics of Innovation

Рет қаралды 20,357

Күн бұрын

In a free market, unlimited human wants often meet sellers with limited supplies. In such a place, competition is usually a force of good. It leads to more choice, increases the quality of products on offer and reduces their prices. If competition is absent, monopolies can form. And that's a problem. Learn about the basic benefits of competition.
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COLLABORATORS
Script: Jonas Jaquet and Jonas Koblin
Script Editor: Morgan Lizop
Fact-checking: Ludovico Saint Amour Di Chanaz
Artist: Pascal Gaggelli
Voice: Mithrilda
Coloring: Nalin
Editing: Peera Lertsukittipongsa
Sound Design: Miguel Ojeda
Production: Selina Bador
SOUNDTRACKS
Tarantella - Adieu Adieu
DIG DEEPER with these top videos and articles:
Listen to the insights of former Uber’s chief economist John List and learn why competition makes it so difficult for Uber to increase the money their drivers earn - even adding tips didn’t work.
www.econtalk.org/john-list-on...
Read about Uber's surge pricing in this case study.
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Read about cartels and why it's good for society to have strong laws that fight them.
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Competition, and good overview by Wolfgan Kastper from the Econlib
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Play Monopoly or Catan to learn how demand, supply and monopolies lead to winners and losers.
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en.wikipedia.org/wiki/Catan
SOURCES
en.wikipedia.org/wiki/Competi...)
en.wikipedia.org/wiki/Monopoly
en.wikipedia.org/wiki/Supply_...
CLASSROOM ACTIVITY
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CHAPTER
00:00 Introduction
00:21 The definition
01:00 The full story
01:15 Competing on price
01:44 Non-price competition
02:12 Free market scenario
02:41 Spectrum of competition
03:18 Monopoly
03:46 Summary
04:06 Tell us how you would compete
04:34 Patrons credits
04: 43 Ending
#sproutslearning #economics #competition #price #monopoly

Пікірлер: 73

@ShawnRavenfire Жыл бұрын

The problem with government intervention is that it works both ways. While anti-trust laws have done good work to break up past monopolies, modern corporate bailouts tip the scales in favor of established business over startups.

@sprouts Жыл бұрын

Well said!

@drjp4212 Жыл бұрын

Truly, the whole reason a government exists is to grant and hold the interests of those companies that profit from a restricted market. Any kind of regulation, labor/environmental/protectionism/quality is meant to protect the largest player/players, so consumers have their options menu restricted.

@readisgooddewaterkant7890 Жыл бұрын

Watching a video on the value of competition On youtube, The video watching monopoly

@sprouts Жыл бұрын

@carynpinkston1939 Жыл бұрын

I live in a small town with only two grocery stores nearby. One is big enough that it can generally supply our grocery needs, and the other is a tiny store that sells good meat, but it's selection is otherwise lackluster (and I don't trust those non-meat groceries besides - I once opened a yogurt I bought from them as I was walking out and found mold). The bigger grocery store practically has a monopoly where I live, so they can do pretty much whatever they want with the prices. It's such a pain! We have a choice of either paying unfair prices for our groceries, or going out of town to buy them (which we can't always do during the winter). Not only that, but this grocery store sells us produce that goes bad almost immediately, and we actually buy it, because we don't really have other options. I wish that our local grocery store had some real competition, or that they'd get in legal trouble for their practices.

@sprouts Жыл бұрын

Thanks for sharing.

@MrMastera Жыл бұрын

Everything works well in theory but in reality there are many other factors like corruption and organized crime that not only inevitably lead to a monopoly, but also choke small and medium businesses until their owners sell them out to the big fish.

@doomersnek3878 7 ай бұрын

I'm interested in seeing how you've come to this conclusion. Do you have a source for this claim?

@MrMastera 7 ай бұрын

@@doomersnek3878 I don't think I can find any official data to how corrupt mayors sell factories to their friends for mere coins, for example. Where I live this is usually shared between people who have witnessed it first-hand.

@escuelasestelares Жыл бұрын

The human factor has been left out. A greedy person is not concerned with the common good. Thus competition becomes a way to exploit, to cheat, to lie, etc. For instance, in the banana example; nowadays the bananas in the market in the county I live, have lost their taste, their quality as a source of nourishment. Producers have found a way to produce more, to add deceitful labels to those bananas (i.e organic) to preserve them longer than their typical shelve lifetime with additional chemicals, etc. Even though, we see a banana, it is not what it used to be, nor is the quality of the land where those bananas grow. All of that thanks to competition. Many times we can be lost with labels such as "monopoly," "free market," etc. We may take side with a label only and even idealistically fight for that label, when the reality behind it is more complex. However, the bottom line, the source beyond labels is the quality of a person. Each person makes up society, and thus; the "aggregate value" of quality of people will give those labels their real meaning.

@sprouts Жыл бұрын

Good critique !

@tirumaleshmani8618 Жыл бұрын

Regulatory mechanism is kept to check this adulteration or low quality ,harmful chemicals. Unfortunately they don't do their job!

@orar6435 Ай бұрын

It is not human factor, it is corporation factor. It is obligated to make profit for their shareholders. If one day, big companies think that harvesting human baby organs while polluting lakes is profitable they would do that, they don't do this because it is not profitable. Corporations doesn't feel anything, they are organisms with only goal, just to make profit. And they are immortal, not like a greedy one person.

@escuelasestelares Ай бұрын

@@orar6435 corporations are made up of humans. Decisions in corporations are made by humans. Greed is in humans.

@perafilozof Жыл бұрын

The only problem is : Companies that gain Monopoly, gain almost unlimited money, and money corrupts those in government which than don't brake up monopiles to prevent their income from being lost. Human greed and corruption always ruins everything.

@sprouts Жыл бұрын

True, it does :/

@joshuasbecreative8444 Жыл бұрын

Awesome video good job on the explanation

@sprouts Жыл бұрын

Thanks. Glad you liked it!

@pueraeternus6520 10 ай бұрын

The banana monopoly competes with the apple, orange, and pineapple monopoly though. Just because there's only one company making a product doesn't mean there's a lack of competition and innovation. A monopoly has to be larger than a specific product, it has to be an entire industry. Facebook isn't a monopoly.

@avonzo Жыл бұрын

For a true competition to work a good governance framework has to back it up because biased support in the market would ruin the intended higher quality for the consumer.

@Munchausenification Жыл бұрын

In general competition is overall a net gain for society in the long run, but not always. For example milk or other dairy products only get cheaper and overall quality goes up with higher production capacity and therefore a monopoly in this case is most of the time actually better in the end. The company called Arla is a good example of this, where the company does not have complete monopoly but close to it, in Denmark. It should also make it easier on a macro level to reduce waste in that milk products isnt something we buy 50% more of when on sale, our consumption stays pretty much the same. But despite this there are also downsides. Innovation could potentially be lower, suppliers have very little room for price negotiation - potentially leading to inflexible supply-side, the company is an expert on the homefront but an amateur in more aggressive markets.

@sprouts Жыл бұрын

thanks for the insightful comment.

@RealSalica Жыл бұрын

Yeah and we ended up with too much variety , farmers working for almost no money (search for suicides in farmers) and a higher amount of food waste because when there are too many options of the same product and grocery stores want to offer them all to the consumers ...well a lot don't get sold .

@sprouts Жыл бұрын

Excellent point

@bcbbarnes Жыл бұрын

A real danger that may have happened in the past, yet not where we ended up today id argue. The hold on the market companies like Cargill, Tyson and Monsanto have does not exactly speak to variety. Reports that Bill Gates owns 80% of u.s. farmland, may be misguiding, are concerning when paired with individual farmers testimonies of David v Goliath. Certainly the amount of food wasted due to our current system is disconcerning. To many farmers unsuccessfully trying to live the dream and compete with said Goliaths could be the supply side of waste. I will look up your recommended reference though!

@13thravenpurple94 Жыл бұрын

Great work Thank you

@kajolk1708 3 ай бұрын

Hey Guys, Loved your illustration style! Very clear narrative and storytelling. Can you mention the tool used to draw all these?

@cheungchoiwan6402 Жыл бұрын

agree for free and healthy competition.

@rcfokker1630 Жыл бұрын

You need a Monopoly, in order to 'break up' other Monopolies?

@sprouts Жыл бұрын

Right, governments usually have to monopoly to exercise power.

@leehayes4019 Жыл бұрын

To a degree, this is why there should be easy movement to different countries. An example would be brain drain.

@ahmedsaqawemaki2766 Жыл бұрын

I hope in the next videos to talk about the ideas of: -Guerrela marketing and -Grassroots marketing Thanks.

@jean-pierrep6844 Жыл бұрын

Beautifully explained

@sprouts Жыл бұрын

Thanks 🙂

@samoelcerv4798 11 ай бұрын

i am all in for the competition, but in a world where everyone is an enemy, only the strong survive and they will thrive. so it is not like everyone benefits from competition, we get better stuff but many fail to get a profit, because someone else has more money to use, to get more profit.

@bigdawg3836 Жыл бұрын

AMD do both on their Cpu product; Advanced the innovation and give the price not only competitive but also way cheaper

@luckshitheone6948 Жыл бұрын

Can You please make A video on "Adjustment"

@destiny3807 Жыл бұрын

Thank you

@sprouts Жыл бұрын

You're welcome :)

@KitagumaIgen Жыл бұрын

Competitive market mechanisms and supply and demand-driven pricing doesn't work for computer software products.

@CaelinDarkGrace Жыл бұрын

What if I have a better product. What I offer is by far the best. Even though others have a form, it's like a dirt road to a paved road.

@silviaelizabethchoquecaste8307 Жыл бұрын

Señores, gracias por el envío ,pero me inscribí en el lenguaje español, mucho les agradeceré si lo envían en español.Gracias otra vez.

@FastEddy1959 Жыл бұрын

Nothing has done more to improve the human condition than the recognition of the power of free-markets.

@vlnow Жыл бұрын

War and the threat of war is maybe an historical greater drive of innovation and technological breakthough

@jdavi6241 Жыл бұрын

I disagree. I think you're putting the cart before the horse. It's not the free-market that improved the human condition, but rather the scientific revolution. The free-market is just the method we happened to use for facilitating and boosting the speed of the scientific revolution. It is also the method we still currently use for disseminating the innovations of science to our citizens through consumer goods. The free market also provides funding to produce more innovations of science to improve the human condition. It is not the only method. Academic/public sector funding also produces innovations as well. For example: The Internet and Insulin. Each has their pros and cons.

@sprouts Жыл бұрын

Perhaps true too!

@sprouts Жыл бұрын

I think so too!

@sprouts Жыл бұрын

@J Davi. Great point. Although without specializations there would be very little science.

@stray2202 Жыл бұрын

HYBE: *starts sweating*

@Omer1996E.C Жыл бұрын

Monopolies are not always bad. And competition is not always good, we need a good balance of these

@3yebex Жыл бұрын

Got a corporate monopoly you want to share that's actually beneficial for the customers and employees?

@Omer1996E.C Жыл бұрын

@@3yebex what does "good" means? You define it, everything you don't like isn't bad. Monopoly, if made through free market, deserve to be a monopoly, as they strived for it, but it is known that monopolies are unsuccessful in such environments, where there is free market and capitalism.

@drakesilmore3760 Жыл бұрын

@@Omer1996E.C Monopolies are almost exclusively what they are because they have managed to sabotage the free market, not because their product is superior. They have more capital, with which they can unfairly outcompete any small business by running their businesses at a loss, and they recoup their cost after outcompeting all small businesses by raising prices above what they would be in a competative market.

@avonzo Жыл бұрын

Every economic concept lives on top of fundamental human condition. The monopoly makes people less inspired and lethargic thus resulting lowering quality over time. Some monopolies run competition within own organisation thus looks good from outside. Fundamentally competition stands the explanation on this video.

@walterbyrd8380 Жыл бұрын

Is healthcare a monopoly in the USA? I have no choice but to use government licensed sources. Those sources can do whatever they want, and charge whatever they want, and I never know the cost ahead of time, I have no say in what they decide to do. I do not see healthcare facilities competing in any meaningful way. Some hospital administrator earn as much as $18 million a year.

@sprouts Жыл бұрын

O_O

@skipbhe Жыл бұрын

I disagree with your statement that governments must intervene to break up monopolies. Monopolies cannot exist in a free market unless they are perfect businesses, else a market niche will open and a new business will move in to exploit it. If GM wanted to be a car monopoly, it would have to satisfy every automobile need from ultra-high luxury cars to sports cars to economy cars - impossible. As big as Budweiser got, it still couldn't supply enough brands to satisfy every beer market segment (some people will buy another brand just to be different). In the extremely unlikely case that a "natural" monopoly did arise in a free market, consumers would win as it would have to be everything to everybody at the lowest possible price - impossible. No, monopoly can exist without the help of the government. Regulation and barriers to entry are the only way a monopoly can exist. When you take the time to examine why a monopoly exists, you will always find government intervention making it possible. Anti-trust legislation is "feel good" legislation that does nothing but create expensive government bureaucracies that become targets for unscrupulous businesses to pay off or bribe.

@sprouts Жыл бұрын

Good point. Thats a theory. But does that work in practice? If so, where?

@drakesilmore3760 Жыл бұрын

So what regulations are responsible for the glasses industry being a monopoly? Because I don't believe the free market can prevent buyouts and unfair competition by running at a loss. That is, at least, how many businesses in my country have become monopolies. Undercut the competition by running below cost, become the only provider of a service, buy out any new competitors.

@Munchausenification Жыл бұрын

perfect markets might exist in theory, but in practice there are too many factors to have people always be reasonable and buy the best product to the most reasonable price, even so products are far from homogenous in that even a simple thing as an apple can create preferences in consumers. Some people like a more green apple, others the redder the better etc. And this is just on the demand side of markets. Supply side is just as complicated or maybe more, considering supply chains often go through several countries and companies.

@psemek8000 Жыл бұрын

Governments can not break monopolies. Monopolies only exist because of governmental interference.

@jdavi6241 Жыл бұрын

Monopolies exist because "free markets" tend towards either monopoly or oligopoly. This is econ 101.

@psemek8000 Жыл бұрын

@@jdavi6241 free markets are the worst enemies of monopolies. Your college degree failed you.

@jdavi6241 Жыл бұрын

@@psemek8000 You are incorrect. Imagine you have a free market in a relatively new but moderately wealthy country. You start a business selling apples. Imagine your apple orchard does better than anyone else's because you started it before anyone else and so you have better starting capital, more employees and better supplies. It is in your financial best interest to buy out your weaker competitors so that you corner the market and make the most profit as you possibly can. If they choose not to sell, you could alternatively poach all their employees or make an exclusivity contract (as per your right of free association in a free market) with the water companies, farming tool manufacturers, fertilizer suppliers etc., so that your competitors cannot source labor or supplies and are therefore forced to sell to you or go out of business no matter how "innovative" they may be compared to you. No pesky government interference, your apple monopoly grows unabated. Extrapolate to other industries. Free markets don't exist for very long. They are inherently unstable. It's first come, first serve without government regulation.

@psemek8000 Жыл бұрын

@@jdavi6241 Okay so open your own bank or car company then if regulations made it possible for you. Your example is false because this is not how monopolies emerge. They emerge by forms of lobbyism and bribing officials to write regulative legislature so your competition cant enter the market and not by buying out all competition, all land, all resources and all workforce etc. Look up why you cant start your own car company unless you are one of the richest world oligarchs who sends rockets to space and gets tens of millions of dollars from tax payers(the competition). Your way of thinking is completely incoherent with how the world around you is operating.

@jdavi6241 Жыл бұрын

@@psemek8000 I am well aware of how monopolies form in a regulated market such as ours through corporate capture of government, thus writing the regulation that governs them. You have misunderstood my point completely. Read my comment again, Did I say "This is how our economy currently functions"? No. I made the claim that the so called unregulated "free markets" you idealize are inherently unstable. My example is not false. I'm illustrating the inevitable outcome of what an actually free market without government regulation would lead to. I'm telling you free markets are no better for avoiding monopoly and have argued why. You simply say "That's not how monopolies form in our economy.", as if I had ever claimed they did? You then brush me off and explain to me what I already know. You provide no counterargument to my reasoning and sidestep the actual claim, which I re-iterate: Free market economies do not stay free due to the profit motive. Once an entity accumulates enough power, they will subdue the rest of their niche in order to maintain their monopolistic hold on the market for maximum gain, no matter the economic system; Free or Regulated. The means by which they do so changes (which you seem to recognize for regulated markets but fail for unregulated markets), but the incentive structure, and outcome does not change. Now, how about you try your best to counter this claim. Explain why the incentive structure and outcome of a free market doesn't lead to corporate consolidation. Why is the free market "the enemy of monopoly"? Back up your claim with reasoning like I have mine.