Halk
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- Joined
- Jan 24, 2011
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| System Name | Desktop PC |
|---|---|
| Processor | 1090T |
| Motherboard | Crosshair IV Forumula |
| Cooling | Arctic Freezer 7 pro |
| Memory | 4x2GB OCZ Reaper |
| Video Card(s) | DirectCU 580 |
| Storage | Vertex 2 120GB |
| Display(s) | Dell 24 inch |
| Case | Fractal Design R3 |
| Audio Device(s) | Asus Xonar Essence STX |
| Power Supply | Seasonic X 650 |
| Software | Win 7 Home Premium x64 |
I believe you're right on the money with this one. Basic economic theory says that monopolistic markets are bad for consumers and price equilibrium is reached at a point much higher than under perfect competition. A textbook monopoly is very rare indeed, but the monopolies we do get are oligopolies.
Within a particular country oligopolies are typically tackled by government legislation, in the UK for example we have a specific government body in charge of dealing with them. You could argue it's successful, but you could also argue they are slow to react and not as aggressive as they should be.
On the international stage there's little or no way to regulate oligopolies. Significant barriers to entry exist, which make it difficult for natural market forces to fix problems. In a perfect market price gouging would instantly disappear as competition forced prices downwards, in an oligopoly suppliers know not to shift prices down.
The individual companies are behaving as individual companies do and should, they don't have ethics, they just act in their own best interests. In a healthy market that would lead to great prices for consumers, in an unhealthy market it does not.
Economics states that eventually substitute or direct competing goods would enter the market, especially on the international stage as individual governments are more likely to intervene to support an industry where the industry does not exist already. Realistically though it won't happen with tech manufacture, although SSDs will eventually push down HD prices, however not for a few years. Likewise cloud storage will have an impact as well on demand.
It's also worth remembering that hard drives are components and in virtually all uses of them they are not the overwhelming cost in an item (where they are demand is more elastic and prices are not as rip off). Because they're not the overwhelming cost then demand is less elastic than it might be - e.g. the Dell box has $200 in parts and only $40 of that is the hard drive, it doesn't matter as much if the price of the drive goes up by 50%, as that's only $20 while the price of the box going up by 50% would have a much more drastic effect on demand.
The only real way to look at things like hard drives which exist in an oligopoly where there are significant barriers to entry is to look at them as a finite commodity. Oligopolist activity will force prices to behave in this manner.
Sad really, it's caused me to postpone my media server upgrade... but frustratingly nothing much can be done about international cartels such as OPEC, not while people are unwilling to stop consuming the product.
