- Thesis outline- Trustbusting in Digital Age
a. Thesis- The market power of dominant search engines such as Google should not be regulated by the government
b. Support #1- In recent decades it has been shown that market dominants does not last forever, so changes in consumer tastes and trends will change dominance in the market without government intervention. Ex) Facebook
c. Support #2- The products of Google and other dominant firms do not lock in customers like Microsoft or windows, so when trends or dominance change, customers can change their media or search engines with little to no cost.
2. Thesis outline- Amazon Monopsony
a. Thesis- Amazon has too much market power which is harmful to America, and should be regulated by the government.
b. Support #1- Amazon and a book company named Hachette got into a dispute because Amazon wanted to cut the price on Hachette's books and Hachette declined, so Amazon has been steering customers to other products and delaying delivery of Hachette books,which is immoral business practice.
c. Support #2- Amazon has free one day shipping on certain books and 2-3 week shipping on other books. Amazon can control this so if they have a dispute with a company, they can choose not to sell their product or to delay shipping.
3. a. There should be more internet regulation of firms such as Amazon that are monopsonists in the resource market, but not for firms such as Google who are monopolists in the product market. I believe this because the resource market effects the products that are available to the consumers, and wages of employees, which can make a large impact on society. For example, if Amazon stopped buying and re-selling a certain product, and they are one of the few firms that sold it, the firm producing the product that Amazon buys and the consumer are both hurt because Amazon has complete market control. This would make it so that consumers cannot purchase said product and the firm producing the product will go out of business. On the other hand, monopolistic firms such as Google do not have as devastating of an effect on society. If Google is dominant in the product market, it may cause other firms to leave the market, which causes less competition, but it does not have as negative of an impact on consumers. Consumers are not locked into Google's services, and could switch browsers and a minimal cost. In addition, recent years have shown that rival firms do rise and monopolists in these markets do fall without government regulation. For example, Facebook was a dominant social media site for years, then Twitter took the spotlight. Chances are good that this will happen again, and firms like these do not need to be regulated by the government.
b. Amazon demonstrates class concepts because they are a monopsony, a monopoly in the resource market. Amazon is a single buyer of many products, and thus they have control over pricing and quantity, giving them complete market control. In order to maximize profits, Amazon wants to buy the good for a low price in the resource market, and sell them for a higher price in the product market. Amazon can make the firms supplying them with the good in the resource market give them the good at a lower price, because if the firm doesn't sell to Amazon, it's harder for them to get their product out there and make profit. This causes Amazon to control the market. Google demonstrates class concepts because they are a monopoly in the product market. Consumers use Google far more than any other search engine. Because of this, Google has few competitors and has market control. To maximize profit, Google wants to charge advertisements the highest price to increase total revenue. Since Google is a monopsony, they can charge a higher price, because if the firm doesn't take it, Google will not show their websites at the top of searches or their ads on the side of the page, wihch hurts their business.
c. I agree more with the article Amazon Monopsony, because I believe that Amazon's monopsonist power impacts me as a consumer greater than Google's monopoly power. Amazon can effect what products I can buy, the price I buy them at, and wages. While both Amazon and Google can use their power in harmful ways, Amazon's is more direct. Search engines, social media, and other online services have proven to come and go in popularity. Google may not be as powerful in ten years, and some other search engine may be. Amazon may also lose popularity, however, it is popular now and if it exploits the companies that it buys products from and charges consumers higher prices, it can negatively effect consumers and firms in a greater magnitude. I agree with Amazon Monopsony that Amazon's power should be regulated by the government. I am no economist, but I think that there should be a price floor on certain items that Amazon buys to re-sell, and that Amazon should not be allowed to change the shipping or delay delivery of the product of a firm they get into a dispute with.
