Quote from: Alpaca John on June 01, 2013, 04:39:04 PM

Quote from: myrkul on June 01, 2013, 04:07:44 PM

This is a valid point, but in a free market, the same things that would topple a natural monopoly would topple or disintegrate a cartel.

Such as?

Well, let's start with the things that a natural monopoly must worry about as much as the cartel does:
Competition. If the monopoly/cartel raises prices enough that a new competitor can undercut them and still make a profit, then that new competitor will appear to take advantage of that situation.
Customer dissatisfaction. If the monopoly/cartel provides a poor enough product or service that the customers are willing to pay more for a superior one, then a new competitor will appear to take advantage of that situation.
Alternatives/new technology. This is somewhat of a subset of the first point, but it's separate enough to warrant being it's own point. The monopoly/cartel need not only worry about someone coming along to provide the same product or service at lower prices or better quality, they must also worry about someone coming along and providing a competing product or service. For example, let's say one company managed to get a monopoly on fast-food hamburgers. They bought up or out-competed every other burger joint in town. They would still be competing with fast-food tacos, pizza, and chicken. Additionally, one of their out-competed rivals might switch gears, and sell frozen hamburgers, that the consumer could microwave at home.

Now for the additional worry that a cartel has:
Infighting. A cartel is, as I mentioned in another thread, somewhat like a wolf-pack made entirely of alphas. At any time, one of those members could turn on the others, and by utilizing one of those methods that I mentioned earlier could bring down a monopoly, squeeze out some extra profits at the expense of the other cartel members. For example, if Burger King, White Castle, McDonalds, and Hardee's/Carl's Jr were the members of a cartel which set hamburger prices, one could cut prices and "steal" business from the others, or refocus on service or product quality, and likewise "steal" business from the others. Or they could start selling frozen burgers (White Castle already does this, Harold and Kumar could have just gone to Wal-mart, instead), or branch out into Pizza (KFC, Pizza Hut and Taco Bell, for instance, are all part of one company, Yum! Brands.)

Quote from: Alpaca John on June 01, 2013, 04:39:04 PM

Quote from: myrkul on June 01, 2013, 04:07:44 PM

As I said, you have to go through proper channels to get a monopoly in the US. If you don't, the penalties are harsh. But if you do, the benefits are enormous.

So we agree that the market is currently regulated to avoid monopolies then? (And yes, it is regulated to enforce certain monopolies as well.)

No, not to "avoid" monopolies. To ensure that only the right people get monopolies, and to protect those who do.

Quote from: Alpaca John on June 01, 2013, 04:39:04 PM

Quote from: myrkul on June 01, 2013, 04:07:44 PM

They need peaceful means of dispute resolution. Such as arbitration.

By whom? How would this work? Elaborate please...

Well, Let's say you were a drug dealer. You had your "turf" staked out, your favorite corner where people came to you to buy their drugs. Now, let's say another dealer "muscled in" on your turf, and one morning, you walk out to "your" corner, to find him and two big tough guys standing where you usually do. You go up to him, and you say, "Yo, this my turf, man, go get yer own corner." He replies, "It's my turf, now, punk. Piss off."

At this point you have several options: You could try for a peaceful solution, you could shoot him yourself, or you could go to the cops. Let's assume that you're a more enlightened drug dealer than is average, and you know that shooting him yourself will only start a war between his gang and yours, and going to the cops will, at best, still mean you need to get a new corner, because the cops will be watching that one for a while, and at worst, land you in jail right next to your rival and his buddies. So you opt for a peaceful solution.

Let's further say that I am an arbitrator (I am, by the way) and offer services to the drug dealers in the area (I don't, but only because I don't know any). You come to me, and ask for my assistance in resolving this turf dispute between you and the new guy. I accept, and proceed to offer my service as an arbitrator to the new gentleman, offering a peaceful solution, one that does not end up with him dead or behind bars. Now, we're starting to strain credulity, but let's assume that the other drug dealer is also wiser than average, and sees the benefit of my proposal. He agrees to arbitrate the dispute, rather than deal with the issue in the typical violent manner.

We then go to a room, and discuss the problems. It is discovered that the new guy was pushed out of his turf by yet another dealer, and just needed a place to conduct his business, and that's why he's taken over your spot. I suggest that the particular intersection where you do business has four corners, and he can simply take the opposite one, which is closer to his home anyway. He accepts, and you get your corner back, and he has a shorter "commute." Everybody happy, nobody dead. This is just off the top of my head, understand, and may not be entirely accurate, it's certainly grossly simplified. But it gets the gist across.

Quote from: Alpaca John on June 01, 2013, 04:39:04 PM

Quote from: myrkul on June 01, 2013, 04:07:44 PM

My point was that the drug market is anything but "unregulated." It's been regulated to death, in fact.

Yeah? Who is doing the regulating in Northern Mexico?

The answer is: nobody. That's the whole point. It's a failed state (in that region).

I'd say the Sinaloa Cartel is doing a pretty good job of "regulating" the drug economy in Mexico.