Thursday, March 28, 2002

Uniform and non-discriminatory terms People beleive that uniform and non-discriminatory terms are good things and a suitable means to control monopoly power. They are wrong. Vital monopolies like Microsoft can use them to force unfavorable terms on everybody (first Sony with patents, now Dell with returns). Also, if monopolies are allowed to price discriminate, they can charge lower prices to the more elastic section of the demand curve. This transfers wealth from consumer to producer, but it's also more efficient, so probably a good (albeit distasteful) thing overall. Finally, non-discriminatory terms are a way cartels can enforce collusion through contracts, even though such contracts are illegal. Someone slipped this language into the Telecoms Act of 1996 which protected the ILECs (ironically, clueless CLECs may have fought for it's inclusion).


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