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June 08, 2018



Simple - pricing power. If a firm puts 10% on its prices will that new price stick or will it lose trade as a result? In competitive sectors anyone who tries to up their prices gets hammered, if they have a quasi monopoly or an oligopoly going on, then they'll be able to increase revenue (and profits) from a price hike.

Can Amazon charge a premium for being the monopoly broadcaster on Boxing Day? I suspect not - no one is going to pay more than the going rate per match for just one day of the year, especially when there's a whole bunch of Premier League matches on the other two channels merely a few days away either side of Boxing Day. So they're in a competitive market - their selection of matches is close enough (both in the nature of teams playing each other, and time) to what is available on other channels to be interchangeable.

Alan Brisling

There are important differences between sild and pilchards which mean that they are far from perfect substitutes. You should consider picking another example.


It's really that the football clubs have a monopoly on something they create. In many ways like the auther of a book or film.

Dave Moore

Theoretically speaking, I would start with the supply vs demand of capital and look at the current risk adjusted rate of return for whatever field you are looking at. There is currently a glut of capital in the world so the natural rate of return on capital is quite low.

If there is perfect competition, then the return on that capital with fall to the risk adjusted rate of return for whatever you are looking at. If the return is higher than that, then this indicates some sort of monopoly pricing.

I think of competition not so much in terms of choice, but in terms of being able to extract higher prices.

AJ Thomas

Real competition is when someone can start selling what you’re selling with no barriers. The competition is then about price, quality etc. So if someone can turn up and start filming the match on their own camera and broadcast it, that would be competition. It’s reasonable to ask for entry fee for the camera, and a charge per viewer. What effect that would have is debatable and only answered by the market.

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