Tuesday, 4 November 2014

Free Markets, Duplication and Fragmentation...

To me, the free-market dynamics enabled by more open access to information and the power of free markets to solve problems, is irrefutable.

However, many companies' only competitive edge is purely in the supply and distribution chain that they have found, and they necessarily sees the democratisation of this sort of information as a threat. Many hide their contracts and pricing behind NDA's in what is in my opinion a lazy effort to hang on to their already declining relevance.

Additionally, it seems that the business case for many modern businesses is solely acting as agents, procuring things; enabling collaborative buying - examples range from the Groupons and PriceChecks of the world, to the real-time bidding employed when selling everything from advertising space to electricity (in countries like the USA where all power is produced privately.)

The problem with a lot of competition on infrastructure-type services, is however twofold: 1) You get a lot of duplication 2) You get market/standards fragmentation - although these lead to a fair price in the short term, in the long term the market as a whole has to bear the costs for this unnecessary duplication.

But duplication, in my opinion, is the lesser of two evils, when weighed up against regulation that dictates how and what you can and can not do.

Duplication, at least, leads to thriving industry and more efficient production through driving competition, where regulation merely serves to drive an information economy of regulators which increases our taxes, fattens our government and ultimately adds little value to society.

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