Comment by alexpotato
1 year ago
Rory Sutherland has a great take on this which is (paraphrasing and my own interpretation):
Innovation is a lot easier when you have a lot of money to spend on R&D. In order to get that money, you can't compete on price b/c that's a race to the bottom. Instead, you want to focus on quality and/or customer service so that you become a monopoly and then can use monopoly profits to innovate to higher quality products and services.
Clip: https://www.tiktok.com/@rorysutherlandclips/video/7314765561...
Peter Thiel made a similar argument about monopolies years ago. As I pointed out then [1], the argument only shows that monopoly is good for the monopolist; it doesn't actually show that monopolies are good for society as a whole.
[1] http://blog.peterdonis.com/opinions/monopoly-money.html
classical MBA says that a firm can compete on price OR branding, unfair advantages (moat) notwithstanding. Competition in commodities is difficult but not impossible given a rational economic environment. Some would say that the modern expectation of returns on investment are irrational, and warp the economics around them too.