Subject: Re: Free Software == Dumping??
From: nelson@crynwr.com (Russell Nelson)
Date: Tue, 27 Jun 95 22:47 EDT

Um, sorry to start a flame war (oh, sorry, that's ``serious
discussion'') and run, but I've got a prior committment for the next
twelve days.  I expect that people will have moved on by then, so this
will have to be my parting shot.

As Adam pointed out, libre software should have no trouble with
dumping (which, I guess, answers my question).  The reason Netscape
might be considered to be dumping is that they give away proprietary
but zero-cost client software that works best with their proprietary
but high-cost server software.

   Date: Tue, 27 Jun 95 14:30 PDT
   From: ghost@aladdin.com (L. Peter Deutsch)

   > And if the dumping succeeds, the prices will be
   > higher, so there's great incentive for the smaller companies to stay
   > in business. So the smaller companies might very reasonably borrow
   > money, and reduce their prices to match.

Oh, another thing a smaller company could do is slash its costs to the
bone, while preserving its entry in the market.  When the big company
gives up, the smaller company goes back into full swing.

   Smaller companies don't have access to capital on the same terms as big
   companies, and the owners have a lot more to lose.  Have you ever asked
   anyone who was running a small company in a situation like this about how
   feasible it was to respond by borrowing?

'been thinking about this, even before you replied.  The problem with
``dumping'', is how you decide that someone is dumping, versus fairly
competing more efficiently?  One way or another, someone has to decide
-- either the government, or the small business owner.

Decide wrongly, and you do a bad thing.

   > And don't forget that, with the lower prices, the big company is going
   > to attract more business.  What they lose on each item, they'll make
   > up in quantity.  :)

   On the contrary, a "loss leader" is a good tactic for attracting customers
   for other, profitable items.  The big company may actually make *more* money
   overall by selling some of its products below cost.

But they still have to increase production to meet the increased
demand.  If they don't, what's the point of dumping??  People will
just go to their competitor, which is precisely NOT what they want.

   > I just don't see why society prohibits
   > dumping.  I can see why companies that are the targets of dumping
   > wouldn't like it, but we don't (or rather, shouldn't) run society for
   > the benefit of one or two companies.

   In my opinion, the idea that Western economies are a "level playing field"
   for large and small companies, absent legislation of this kind, is a
   dangerous myth.

I agree.  A level playing field is not necessary.  Large and small
companies each have their own dynamics, and there is a place for both
of them.

What is most important is that the government realize that it has no
better clue about how to run the economy than any of the individual
players.  I view a free market as a distributed, reliable, redundant
computer, and the government as a mainframe.

-- 
-russ <nelson@crynwr.com>    http://www.crynwr.com/~nelson
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