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Steve Randy Waldman
@interfluidity.com

this is a real problem, but cartel is a bad solution, for very obvious reasons. (it is the main solution we currently use in Western economies, which explains why our economies have turned extractive rentier, 'cuz there's no limiting principle to cartel.) can i interest you in a better solution?

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ghost malone ergo propter bones@proptermalone.bsky.social

so long-term the way you'd expect this to go is that the players would slow down capex such that they can make money, but if you do that while your competitor is running at a loss you're roadkill, so everyone needs to slow down at once, which is why you need the cartel.

Steve Randy Waldman
@interfluidity.com

(How? Do you think states can fine-tune market power, allow firms just enough to cover fixed costs, but not enough to become extractive? Do you think that withstands politicians' and the public's information disadvantages when they lobby for more market power? Historically, how good are we at that?)

Genevieve Signoret
@gsignoret.bsky.social

Government can't set optimal limits on market power. But, having identified a market failure, it can intervene in ways that improve outcomes. Safety regulation (safety testing, imposing liability, requiring disclosure of serious incidents, security 1/n

Genevieve Signoret
@gsignoret.bsky.social

standards, prohibiting especially dangerous conduct), for example. "Historically, how good are we at that?” is the right question only if the alternative is a well-functioning market. We lack one. 2/3

Steve Randy Waldman
@interfluidity.com

But states get to design the markets! We don't have to take a particular set of imperfections (they will always be imperfect) as given. The choice set is broader than a binary, we always want both imperfect regulation and imperfect markets, but we want to think hard about how we craft both.

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