Comment by lotsofpulp 13 hours ago
High barriers to entry have nothing to do with free markets.
>In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers.
https://en.wikipedia.org/wiki/Free_market
As long as a buyer and seller can negotiate whatever number they want, or walk away, it is a free market.
I am not seeing the discrepancy:
> A free market does not directly require the existence of competition; however, it does require a framework that freely allows new market entrants. Hence, competition in a free market is a consequence of the conditions of a free market, including that market participants not be obstructed from following their profit motive.
The barriers to entry being referred to in the Wikipedia article are presumably government related. No government is stopping Intel or Samsung or any of the other chip makers from selling what TSMC sells, hence the “framework that freely allows new market entrants” is there.
And the subsequent paragraph seems to be exactly what is happening in the market of high end chips:
> Hence, competition in a free market is a consequence of the conditions of a free market, including that market participants not be obstructed from following their profit motive.
You don't see a discrepancy between your claim that free markets have nothing to do with high barriers to entry and your own link claiming free markets require free entrance to the market?
And no, it is not specifically referring to government related barriers, although those certainly count. Government is very often the thing that generates barriers to entry, but it is by no means the only barrier to entry. Any barrier to entry is, from a strict theoretical sense, a departure from a pure free market, although that's more in the "spherical cow" sense of the idea.
You are using "free market" as a political term. In that sense, it refers to little more than to the absence of unnecessary regulations.
Economics is more concerned about whether "free market" is a useful description of the system. If there is nothing in principle to prevent the emergence of new competition, but barriers to entry (e.g. availability of capital / talent / machinery / raw materials, long-term contracts, or the time required to set up a new business) make it difficult in practice, the system may not behave like a market. Then you need to focus more on politics, both between and within governments and companies, to understand how the system is actually working.
This is an overly simplistic view of what "free market" means in practice. The most obvious issue is that, in a free market economy, government protects private property, ensuring that any capitalistic definition of "free market" does, in fact, require government intervention into the expression of supply and demand.
And now that we've established that capitalism necessitates government intervention, capitalism is incompatible with such a simple definition of "free market." We can begin negotiating just how much government interference in the market is allowed before it's no longer a free market, but it's categorically impossible for a capitalistic free market to be pure expression of supply and demand.
From just a bit further down in your link:
https://en.wikipedia.org/wiki/Free_market#Low_barriers_to_en...