Sender: Lazlo Nibble <•••@••.•••> > I fail to see how competition would increase cost of production. It seems pretty straightforward to me. Say I run a store of some kind. My supplier offers progressive discounts based on the volume of items I purchase -- the more I buy from him, the lower my price is. But the more competition I have, the fewer customers I have -- which means I buy less from my supplier, his discount to me drops, and my cost of business increases. -- ::: Lazlo (•••@••.•••; http://www.swcp.com/lazlo) @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ Sender: "Erickson, Dave" <•••@••.•••> An unknown person (possibly Gary Weston) wrote: > With regard to the idea that deregulation and competition in the telecom business will be a boon to consumers, I'd like to point out a tiny bit in the Santa Rosa Press-Democrat (owned by the NYT) today. Both Pacific Bell and GTE have filed for increases in local telephone rates. The reason they have given to the state PUC is that competition in the local call business, which began only a few months ago, has increased their costs enough to warrant an increase. That isn't exactly what the deregulators promised us. Rick Emery wrote: >I fail to see how competition would increase cost of production. Costs of advertising, perhaps. But not production. Perhaps each's profit margin has been reduced due to customers being drawn away towards the competitor. How- ver to declare an increase in costs? Ludicrous! Basic, high school supply- and-demand economics would prove otherwise. Let's not fall for the old adage: "If it's in print, it must be true." This one snippet certainly weighs lightly against the evidence that deregulation provides the best choice at the best price for the consumer. rick emery *************************************** I can offer a possible explanation for deregulation increasing costs in this particular case. Not all geographic areas can be profitable for LECs like Pac Bell to provide phone service. However, they were (as a regulated monopoly) obligated to provide phone service to all who requested it. In order to offset the cost of providing service to remote or sparsely populated areas, the PUC established a surcharge added to the phone bill of all subscribers. This surcharge goes into a fund which is used to offset the cost to the phone companies of operating in unprofitable areas. As a result of deregulation, this fund is being done away with. On top of this, new players in the LEC marketplace obviously are motivated to compete only in the profitable geographic/economic sectors. This leaves the original LECs in the position of having to continue to provide service in areas that are unprofitable, while having their profit centers eroded by the johnny-come-lately's. So you can see that deregulation may have the possible effect of causing the original LECs to drop their least profitable customer base, with no "safety net" for the folks who live out in the sticks. Not only that, it creates an uneven playing field for the original LECs who have a huge investment in outside plant and equipment to provide service to unprofitable areas. There's another adage we perhaps should not fall for here, "Basic high school supply and demand economics is always true..." ;-) Dave Erickson ~=-=-=-=-=-=-=-=~=-=-=-=-=-=-=-=-=~-~=-=-=-=-=-=-=-=~=-=-=-=-=-=-=-=-=~ Posted by -- Andrew Oram -- •••@••.••• -- Cambridge, Mass., USA Moderator: CYBER-RIGHTS (CPSR) World Wide Web: http://jasper.ora.com/andyo/cyber-rights/cyber-rights.html http://www.cs.virginia.edu/~hwh6k/public/cyber-rights.html FTP: ftp://jasper.ora.com/pub/andyo/cyber-rights You are encouraged to forward and cross-post messages and online materials, pursuant to any contained copyright & redistribution restrictions. ~=-=-=-=-=-=-=-=~=-=-=-=-=-=-=-=-=~-~=-=-=-=-=-=-=-=~=-=-=-=-=-=-=-=-=~
