The market wants to minimize the number of firms in a market, because duplication is…

1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (622) · July 2, 2019

The market wants to minimize the number of firms in a market, because duplication is wasteful. Division of labor is an extremely important issue. Multiple firms = reduced division of labor.

So why do markets consistently and sustainably break this maxim?

Replies

1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (2833) · July 2, 2019

In short? Vanity.

1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (622) · July 2, 2019

The answer: What is a market?

It is all about the goods being sold. Burger King doesn't duplicate everything McDonald's does. They create their own goods, too.

Differentiation is key, and once that is understood, you can understand market structure.

1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (622) · July 2, 2019

Not vanity. That implies superficial differences. True niches. Differences in goods.

1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (622) · July 2, 2019

If it can be profitable to serve a niche, there will be a business serving that niche in the long run. That specific business may change, but there will be a business serving that niche.

1AKHViYgBGbmxi8qiJkNvoHNeDu9m3MfPE (622) · July 2, 2019

So, if you want to design a market with a distributed market structure, how do you do that?

It's all about designing niches into the system that are necessary to the broader marketplace.

This is at the core of why BTC will fail, and why BSV matters.