WARNING: opinions ahead. Do not take as the truth, just do as Bill Nye says: CONSIDER THE FOLLOWING.
We live in a day and age in which brand names are plastered all over our shirts and billboards and TV sets. Yessir, it’s a capitalist society alright, where consumers are led by their noses and companies execute hostile takeovers left and right (Google, eh?). In case you guys haven’t noticed, I’m not a huge fan of capitalism or its little cracks in the seams.
But I don’t want to talk about that right now. What I mean to talk about is the meaning of a duopoly. A duopoly is very similar to a monopoly, and yet completely different. A monopoly is the situation in which one business dominates an area of industry in which no other company is competing (or hopes to). Therefore, the company has no problem jacking up prices because the consumers have nowhere else to shop. An example of this – and its negative impact – is Rockefeller’s Standard Oil or Carnegie’s Steel or Vanderbilt’s Railways. It’s widely accepted that monopolies in America are bad, bad things. The government had to go in there and split them up (called a trust bust) and then institute Sherman’s Antitrust Act to prevent monopolies from ever ravaging people’s lives ever again. However, there is little about duopolies.
In theory, more companies present results in more competition. This supposedly also results in higher quality products, in order to beat out the other competitors and win over more customers. Naturally, without competition, there is no inclination to make quality products because consumers have no choice but to purchase from that one business. The key here is that businesses do NOT exist to please the customer, as they try to portray themselves; they do not care about you or how happy you are with their product or service. All they care about is that money in your pocket. Therefore, they are perfectly content with selling shitty products/services, so long as they turn a profit. Therefore, competition does NOT guarantee a happier customer. Generally speaking, in order to create a better product or make a service more efficient, time and/or money is to be invested. Obviously, the business would rather avoid this expense if they could. For the most part, this is usually the case. What it usually comes to is the business guy shrugs his shoulders and says, “If you don’t like what we make, go buy somewhere else.” You see, another way to make profit is to cut expenses, also known as overhead and disintermediation. There is a calculated net expense that goes into the production of one product – take, for instance, one pencil. In order to produce one pencil, raw materials and tools are required. Assuming these tools rarely break, I’d say a good amount of expense lies in the raw materials, the manpower, the maintenance, etc. This amount is then translated to the price of the good, but increased by some factor in order to turn a profit. There is a happy balance somewhere (not accounting for price ceilings and floors) where the consumer is welling to shell out a certain amount and the business is willing to accept that meager amount. When one starts to push the other for prices that are too far from this medium, the other says no. However, in our current society in the United States in which so many people reside, when and how does the consumer say no to prices that are too high? As I mentioned earlier, the business has no intention of improving its product to suffice for the rise in prices, nor does it want to disclose the corners it cut, legal or not. And here again we have the guy in the Armani suit with his hands in the air, telling us to take it or leave it. Unfortunately, the power of the consumer is diluted by sheer numbers; the business figures it can simply make money off of someone else.
A smart customer is one who understands the purpose and the means of the company, as well as a smidgen of the history of its products and their prices. The smart customer decides for oneself what portion of paycheck one is willing to pay for what. What else can I buy with the same amount of money? [<= opportunity cost] Now let’s be real for a second: how many of us actually do this? I’m not going to lie, I almost never engage in research of companies unless I know I will be buying from them on a regular basis, although I definitely use the second process a great deal (my friends know exactly what I am talking about). Again, reality: a customer’s amount of thinking going into a purchase is directly proportional to the cost of the item. To make matters worse, companies do all the thinking for us, giving all of our counter-arguments in their ad, and then refuting them as soon as they brought them up, leaving us with our mouths open but nothing to say. Of course, when they are asking all the questions, it leaves us consumers with empty heads anyway. Here’s some opinion: people hardly think at all, about anything. So what we have are a lot of not-so-smart customers who don’t ask questions, or when they do, the business has already thought out an explicit answer that reveals exactly some amount. In essence, consumers have turned into a herd of brainless steer that follow the crowd and don’t complain. The problem lies in that if just one becomes a straggler, they are herded back into the group, or simply left behind. In the very grand scheme of things, one lost customer (maybe a smart one, too) is nothing. As usual, the power of one is diluted by the many.
So you may be scratching your head and asking your computer screen, “What does any of this have to do with duopolies?” Don’t worry, I’m getting there. So I’ve gone over the power of businesses to make money and the weakness of consumers in retaining it. Clearly, the business has an opening or two to exploit the consumer and get away with it without much ado on the customer’s mind. So, supposedly, if two companies compete, they will lower their prices/improve quality/cater to the customer, which is obviously good for the customer, right? Of course, businesses want to eliminate competition altogether if they could. It’s not quite as easy as simply assassinating the CEO of a competitor or sabotaging each other (because this, in essence, is an expense itself). What if the businesses were to work together? When two or more businesses decide to work together, this is known as a cartel. This involves artificially fixing prices, injecting speculation, and lobbyist armies on the same side. Obviously, it doesn’t just end there. So let’s just focus on the most raw idea: fixing prices. There are counter-measures to prevent this, but we’re just going to look at this as a general umbrella analogy. If there are only two suppliers (and let’s assume plenty of demand), if they both raise their prices the same proportion, they are not effectively competing against each other any more than before (again, provided demand is high enough to where they will still buy at the higher prices), but they are both making a better profit, with which they will happily agree with. Naturally, the consumers will grumble about having to shovel out the difference… or do they? When prices rise, do consumers know why or investigate? As I outlined earlier, smart customers are relatively outnumbered by the not-so-much (hypothetically). I’ll make an exception in which those who are so insanely rich that they don’t really notice price hikes or even care enough to be disgruntled shall be excluded. To make things worse, when consumers simply swipe an unchanging card rather than physical bills and coinage, with which they would notice the drastic change in which how much they are really paying, the price difference just goes over our heads. Even still, some may understand this ripoff and yet still pay because the effort to find an alternative is, supposedly, not worth the time. Whatever the reason may be, consumers lose this battle.
A duopoly may be slightly or drastically different, depending on the product/service, their history with one another, etc. Duopoly does not imply a cooperation, but this is still viable in the situation of a duopoly. The way I like to think of duopolies is the Aliens vs. Predators movie slogan: “Whoever wins… we lose.” Despite what may appear to be fierce competition between the two, consumers will continue to be left in the dark. Are business acquisitions announced to us when it happens? Does the Dreyer’s Ice Cream company (doesn’t independently exist anymore, btw) announce that it had recently been acquired on each tub of ice cream? “NEW Company! Same great taste! (Higher price!)” So when it all gets narrowed down to just two dominant companies like Coca Cola and Pepsi, we are forced to choose between one of the two, both of which have their own individual way of scamming us, so it turns into picking the lesser of two evils. For instance, the payment plans for both Verizon and AT&T warrant caution… at the moment I can’t quite remember why both suck. I remember hearing that Verizon customers enjoy a pretty good and agreeable price when calling, texting, whateverthefuck with others on Verizon, but you get SCREWED whenever doing whatever with those on anything else (say, AT&T?).
And let’s get this straight: there are a LOT of duopolies. It only takes a third party (btw, that’s where the phrase comes from) to break the tie and properly check and balance. I can think of a few off the top of my head:
- nVidia vs. ATI graphics cards
- Kraft vs. Nestlé foods
- Google vs. Apple smart phones (and OS and so on…)
- Activision vs. EA video game publishers
- Marvel vs. DC American comic books
- Kodak vs. Fujifilm video/motion picture film
- Intel vs. AMD computer processors
- Nikon vs. Canon digital cameras and assorted accessories
- Pepsi vs. Coca Cola soft drinks
- Teamspeak vs. Ventrilo VoIPs (okay, it’s a small one, but I often deal with this one)
- Verizon vs. AT&T telephone service providers
- UPS vs. FedEx parcel/mail service
- Sirius vs. XM radio providers
- Mastercard vs. Visa electronic payment
Now let’s not panic. There is still a plethora of products/services that are NOT duopolies or simply cannot be, the former being like Sony PS3 vs. Nintendo Wii vs. Microsoft Xbox, the latter being something like beer, with many competitors simply due to what is an instantaneously distinguishable “preference”. When providers provide nearly the same thing with long term or under-the-surface differences, this is where acquisitions are made and maintained without much ado, with consumers either sighing with grief or shrugging their shoulders. And not all duopolies are evil monsters.
This is the point I am trying to make. It is up to us to decide for ourselves whether or not a company is getting too big or to start buying elsewhere, before it’s too late. We must become smart customers make the best decisions with our money. We must decide for ourselves how much we are willing to pay for each and every product/service. We must understand what each business has to offer and the dangers of duopolies and cartels. Realistically, we cannot stop this from happening, but we can remove ourselves from the sea of victims.
Let me just REINFORCE that I speak for myself when I say these things, and I discussed these things conceptually more so than realistically. I do not want to offend people or give them the wrong ideas or start some goddamn revolution. I am not some all-knowing being, this is just what I perceive. Jesus, ever since the first fucking post…
