market power takes different forms. firms like NVIDIA or TSMC or ASML are have a great deal of market power as single firms. Apple as well, but less, the goods it uniquely provides admit more substitutes. 1/
but more commonly market power is an industry rather than firm characteristic. if there are tractably few major firms, market power is exercised by tacit coordination. major firms settle on similar strategies. 2/
if tariffs in the US leave international firms fearful of losing long-term share, they may try as the article suggests to pass incidence of the tariff to third countries. if there are a few dominant international firms, we may find they make similar choices. 3/
they will argue it’s because they face similar market constraints — eg British markets are price sensitive — but if they jointly perceive a greater interest in maintaining US markets access than competing with one another for share, they’ll also quietly converge and copycat. 4/
of course smaller, purely domestic players and upstarts may try to take share from the international oligopolists. but in many industries, multinational incumbents remain difficult to challenge. 5/
how well and how long tacit coordination in mutual benefit of large incumbents can last in any industry will depend on the particulars of the industry and, well, chance. 6/
but it is mistaken to imagine this kind of coordination cannot or will not occur, just as it’s mistaken to imagine it has no limits. 7/
market power is a continuum and its exercise a coordination challenge, but exercising market power and addressing those kinds of challenges is the very heart of real-life commerce. /fin
monopolists may be intertemporal optimizers. they may leave some money on the table short-term, because they believe it confers longer-term advantages. 1/
if you are apple, you want people deep in your ecosystem, and you may be willing to tolerate a bit of redirectable consumer surplus in order to encourage that. 2/
now comes a tax in one country. if you pass it through in just that country, it hits that surplus only there. but maybe it hurts uptake into your ecosystem and brand satisfaction there. you can of course partially eat the tax, but you don’t like the hit to profits. 3/
alternatively you can reoptimize that tradeoff between longer term uptake concerns and immediate pricing concerns globally. 4/
you pull back a little bit on the immediate-term unnecessary surplus you had previously offered globally, take a hit on expected future uptake globally, to reduce the hit in the important country now imposing the tax with minimal impact to profits. 5/
not every monopolist is maximally immediate term ruthless. the point of being a price maker rather than a price taker is you have choices. 6/
if your understanding of market power is it is always exploited like an Econ 101 textbook in which the only relevant dimensions are price and quantity, you will miss the real diversity and unpredictability that comes with having the power to choose. /fin
or that they just have a great deal of market power and can choose to make different tradeoffs between pricing, volume, and customer loyalty/satisfaction under different circumstances.
our competitive global markets.
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an out-of-the-box way wealth taxation might yield a recurring flow is to let it compound in a sovereign wealth fund. compound growth of a sovereign wealth fund is fiscally similar to increasing capital taxes year after year, but with no new taxes enacted. www.interfluidity.com/v2/6987.html
Text: A sovereign - er, social — wealth fund is a taxation machine. It is an automatic taxation monster. It takes the miracle of compound growth that capitalists are always on about and turns it into a miracle of compound taxation, effectively taxing wealthier cohorts (those who would otherwise own the SWF assets) an ever increasing share of income year after year without requiring any new legislation, and with minimal distortion of investment behavior. To see how this works, let's imagine that we want to simulate the flows of an SWF+UBD. We'll imagine a very simple scenario. Let's define a "notional" SWF. The SWF is going to be financed by a tax enacted just once, which will yield $1T in Year 0. The tax take will grow with nominal GDP, which we will model as growing at 5% annually. Beginning at the end of Year 1, the SWF will make payouts. For simplicity, we will base payouts and returns on the end-of-prior-year balance. That is, we are conservatively assuming that the taxes we collect within a year are unavailable until the year following. We will assume a constant rate of investment return of 8% per year. Echoing Bruenig's proposal, we will have the SWF payout 4% of the prior year balance each year. However, instead of actually forming the SWF, let's say that the government were to decide that there's no need to intervene in the miraculous private sector with actual state ownership, that the assets can remain, um, efficiently managed in private hands but the government will simply use the tax system to reproduce the flows an SWF would generate… [truncated, see the linked piece]
“On our current trajectory, we might just get those jobs making tennis sneakers.” // an excellent piece on China, encouraging sane industrial policy in the US, by @davidautor.bsky.social and Gordon Hanson // (good luck with that under the current administration) www.nytimes.com/2025/07/14/o...
Opinion | We Warned About the First China Shock. The Next One Will Be Worse.
Link Preview: Opinion | We Warned About the First China Shock. The Next One Will Be Worse.
The Constanta Cazino and waterfront, next to the port, sunny and pretty today.
we should refer to that tennis player Carlos as "Crocodile".
they should join up into a kind of “commission”.
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(if we’re going to evaluate this hypothesis, perhaps we’ll want to control for latitude.)
it is more expensive and incomes are lower, but in Romania at least, that hasn’t prevented AC from becoming very common. (summers are hot here, especially in the capital Bucharest, which suffers from a kind of urban heat island oven effect.)
there’s no scarcity of AC in Romania.
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i favor both PR and compulsory voting, but i think you are giving PR a bit too little credit. electoral reform is not primarily about better reflecting preexisting voter preferences, but precisely about reorganization the affiliations and allegiances of the electorate. 1/
under PR, organizers can form and voters can join, identify, and vote for “mediating institutions” that truly reflect and represent their preferences. 2/
PR (along with other electoral reforms, like approval voting in necessarily single-winner contexts) is not about reflecting the electorate, but allowing it to reshape itself into something that can more coherently and effectively participate in a democracy. /fin
doesn’t sound hopeful.
all constructs are invalid, but some constructs are not so invalid as to render them entirely useless. (riffing on George Box, all models are wrong…)
“creativity” may be more susceptible to automation than taste.
to say that voters are not a meaningful locus of accountability doesn’t mean many of them aren’t in some personal, moral sense culpable or worthy of blame. 1/
nevertheless, it’s unhelpful to lift that personal judgment to the level of politics. you’ll blame the mistaken or persuadable with the genuinely vicious, negatively polarize those who might otherwise be reachable into rationalizations, or into supporting the vicious for fear of retribution. /fin
oh shoot! i misreplied, reading your reply as a response to a different post! sorry!
which is easier if you coopt the least vile of them rather than if you openly detest and shame them all together.
the sistah souljah moment of throwing bill clinton under the bus would be quite the poetic irony.
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“voters” are not a meaningful or helpful locus of accountability. it may feel righteous to blame the people who voted for catastrophe, but there’s no mechanism that translates blamers’ self righteousness into virtuous future outcomes.