A speculative incentive design: self-determined price commitments as a way of averting monopoly

This is a platform-killing limitation, if it were workable at all. There's no way to survive if you have to have prices you guessed at years ago, and newer competitors can pick theirs based on more recent data (including reaction to your committed prices).

Fortunately, it's not actually workable. Who is supposed to enforce this, and how will they determine which technological platforms are subject to this, and what changes in the platform justify different pricing? This implementation is more complex and difficult than the current SEC, FTC, and court system of identifying and limiting monopolistic practices.

I'm pretty convinced that interventions around pricing or post-monopoly behaviors are the wrong way to think about the problem. Look for ways to remove barriers to competition, not for ways to reduce the profit from non-competition (mostly; it's possible that a mix of approaches is better than any single one). To the extent that you have groups or agencies who can enforce anything in the first place, they should be enforcing data portability and transparency, in order for platform competition to flourish as customers change their preferences.

Oh, one more difficulty in price-setting enforcement: many MANY platforms don't have a single visible price. Ad sales are a very complicated contract + auction environment. Commissions have less-complicated but still variable pricing based on categories and contracts that change over time for key partners.

How do you distinguish price-dropping to force the competition out of business (boo!) and price-dropping to be able to compete with the newcomer (yay!)? After all, cannot any competitive situation be interpreted as everyone trying to force everyone else out of business?

I remember that some years back, the price of several top-end commercial 3D modelling and animation tools suddenly collapsed. Houdini (edit: or maybe Maya) was around $6000 per year per user, and dropped to about $1200. Some trade fairs showcasing those high-end tools also stopped happening because the companies couldn't support the expense. The reason was that free tools like Blender, and cheap ones selling for a couple of hundred dollars, had over the years improved so far that a lot of professionals were deciding that they could no longer justify the cost of the expensive tools.

It was probably a good thing all round. The producers of the high-end tools have had to work harder to keep ahead of the low-end tools, and the producers of the low-end tools have reason to add more and more high-end functionality. And users at all levels have had better and better tools to work with.

I do not believe that any sort of regulatory interference with this would have benefitted anyone.

Primary flaw is that you often can't buy the "same product" (in this case, a service) from one year to the next. So there is no way to enforce a future price, given that lirerally no-one knows exactly what the monopoly provider will be selling 2 years from now (just that it will fulfill the same need)

There are competitors to both Uber Eats and Amazon Books. It doesn't seem like this mechanism prevents people from trying.

On the other hand, if you force companies like Amazon that warehouse a lot of products and to commit to prices years in advance you destroy a lot of economic value. It's vital that an online seller can clear unbrought product by giving rebates to his customers.

I have another idea: if the mere existence of a competitor makes a monopoly drop prices all the way from monopoly price (way above break-even) to below break-even (necessary to crush the competitor), maybe the government should be selling some monopoly-prone goods at break-even. It would be very profitable for consumers and cost almost nothing.

An argument should probably made that reducing the profitability of tech even in the direction of fairness is bad, for anticapitalist realpolitik technocrat reasons. I'm not making that argument, but someone probably should.

Hmm

Finally as at the EU level, a number of national competition authorities in Europe have been able to end investigations one excessive prices by receiving price commitments from the dominant firms investigated... [London Stock Exchange in 2004, Enel, Italian electricity incumbent in 2010, E.On regional gas suppliers in 2008

Is this the same kind of price commitment, I wonder? They sound like the kind of industries where there can't be competition even given all fairness, so probably not, probably the prices committed to were not self-determined. Not so exciting.

I'm wondering if we can put more degrees of freedom in the conditions under which price commitment applies, meaning. I imagine this process being initiated by the market instead of being enforced on whatever arbitrarily defined category of product matches what we currently think it should apply to.

I feel like there is some dialogue between two honour-bound champions of industry that would lead to the incumbent being obligated to commit to a future price, simply as a result of answering questions and being held to their word. Probably involves some kind of wager somewhere.