Could you run a competitor out of business ?

[rpgamerd00d]

Suppose you owned a small business.
Suppose a competitor existed in your area.
Suppose you were in business longer and had more customers.

Could you bring yourself to LEGALLY ramp up your business, advertising, etc. to run that person out of business?
Could you take steps to expand your own business and success, knowing that you'd be crushing someone else's dream?

Republicans believe that this is one of the fundamental, core ideas that drives America, and what makes America great. The idea of competition, even ruthless competition. Republicans believe that without this harsh reality, American business would be weak and we would not be the super power that we are in the world.

Personally, I totally agree with it. Fair competition does make business stronger. Note the word "fair". Also note, the word "fair" does not mean "equal". It just means "fair". If someone is rich and can simply out advertise the little guy, that's "fair". Not "equal", but "fair".

I am curious how many Democrats actually agree with this philosophy.

[sui generis]

1. the funny thing is the idea

that having exclusive control of a commodity is somehow concordant with successful capitalism is just wrong. It may initially be profitable in the short term but it is a bad long term strategy.

Without competitors to differentiate yourself from, you cannot develop the technology and innovations that spur economic growth. Monopoly by definition is economic stagnation.

Embrace your competitors. Competing on variety breeds innovation, and innovation spurs economic growth.

[rpgamerd00d]

2. I am not takling about monopolies, I said "small business".

Clearly, you would not be a monopoly, just a small business with another small business like you nearby, who you then run out of business. Could you do it?

Its a moral question, not an economic one.

[sui generis]

8. thanks for the free scolding

I clearly didn't get the moral part.

Fuck the morality of the issue. Morality has nothing to do with business. Ethics has everything to do with business. The answer is an economic one. My answer still applies, and you can derive my "morality" from it.

If you have ethics and principles in business of any size you would not try to kill your competitor. Ultimately you cannot expect people to practice "morality" in business - all you can do is induce them to find an outcome that will let them be successful enough to continue to provide jobs and money into the local economy, and this is especially true of small businesses.

Here's a proposition: Suppose you have two competitors, and one of them produces a lousy product that is nevertheless more popular than yours because they have deeper pockets and can undercut you on price, forcing you to let go of three employees. Now what do you do? Do you leverage your inventory and smack them down with a great ad campaign for your product? Do you get a loan to buy up all the supplies they use to make their cheaper product? Do you "collude" with the third business to run them off? Is it ethical to put them out of work based on your perception of their goals?

Subjective morality does not figure into this as a business standard.

[patcox2]

3. If the public chooses my product, I didn't run anyone out of business.

Now if I used unfair or illegal means to "run" him out of business, that would be different. But you seem to be asking whether a business should hold back to allow the other to succeed as well. The answer is no. That verges on a cartel or an agreement in restraint of trade, an agreement between businesses that should be competing, which allows them to divide the market up between them. Thats illegal.

[rpgamerd00d]

4. OK, well, no, I just mean really ramp up advertising, etc. i.e. make...

... a real effort to outperform them, vs. just running your business as usual.

[patcox2]

5. It depends on your motive.

Of course, someone's personal moral code is none of my business, and I would not enlist the law to enforce my personal moral code on others. The law sets the minimum level of behavior which society will tolerate, legality does not equal morality and vice versa.

That being said, a person who deliberately, yet legally, expands his business in order to put someone else out of business, who is motivated entirely by spite or malice against the other business owner, is not acting morally.

But someone who does it because they simply want their business to grow and survive, and for whom malice against the other business is not the motivation, then its not immoral.

[soothsayer]

7. If you slash your prices to the point you are losing money just to

run your competitor out of business, that seems wrong. Just advertising and stuff, that seems fine.

[patcox2]

9. Thats illegal, thats an unfair practice.

There are various complicated rules, but one clear one is that selling at a loss to drive someone else out of business is illegal.

[rman]

13. Depends on why the public chooses your product;

Is it because ads for your product are omnipresent, and the public basically doesn't know about your competitor's product, or is it because you just make a better and/or less costly product?

Dividing the market is illegal, but monopolizing it is not?

[displacedtexan]

6. I don't support it, and I watched it happen to a friend.

Her shop had been in biz for 20 years when a couple of moms got bankrolled by
their husbands to start a carbon copy of my friend's biz.

They even lied to the regional reps and said my friend was talking about
going out of business-- that way they could bypass the regional exclusivity
contract my friend had.

They sold inferior products and had the full power of the local
Republican party hacks (their friends) to support them.

My friend's biz lasted 3 years while she spent a fortune on legal fees
trying to fight these women.

Finally, last Fall she couldn't afford to fight anymore.

Fair? That was not an issue. These women cheated and lied to get ahead.

[Neil Lisst]

10. Most small business owners do what they do

Most small business owners have their own world. They have their debt, their assets, their liabilities, their family, their history, and their little piece of the market. They don't compete with anyone, not directly, because they're just one more store or cafe. By being who they are, they attract a certain segment of the market.

In the hypothetical, I would never engage in predatory pricing to undercut a competitor. I'd worry about fulfilling my niche in the marketplace.

[Atman]

11. I did it

But maybe the circumstance are different. In my early twenties I worked as an editor/art director for a surf magazine, the only one serving the east coast at the time. The owners were idiots, and while the readers dug the magazine -- it was the only one covering them -- the advertisers were becoming more and more troubled at supporting the publishers, whose business methods were becoming increasingly suspect. It took me about six months toiling quietly behind the scenes, but I'd go home at night and work on logos and layouts for a spec magazine of my own to replace them. When it was time, I called up the advertisers and told them what I was doing. I lined up sponsors, investors, all on the QT. I was a nervous wreck, as if any one of them spilled the beans to my employers it obviously would not have been a pretty scene. I created an entire spec issue and found an international distributor for my new magazine. By the time I finally launched it, I had bled most of the advertisers from my old employer, which made it impossible for him to stay in business. My own mag lasted a couple of years, until my wife got a great job offer and we moved to New England...my partners were tired, it was too expensive to continue, so we shut it down and moved on.

I never regretted it, and it even garnered me a listing in the bibiography of "A History Of Surfing." I was a couple years ahead of the surfing craze, and have even been credited by one of the current surfing mags for having helped lay the groundwork for the expansion of surfing's popularity on the east coast. Kelly Slater was one of the groms that hung around my office and stuffed subscription envelopes for us!

[rman]

12. the paradox is, competition leads to less competition

The process of competition may yield "lower prices and better products" (the promise of free market capitalism). But the result of that process is elimination of competition. In other words, it leads to monopoly, which doesn't necessarily yield lower prices and better products.

How about using capital to sell at a loss in order to drive competition out of the market. Or using capital to obtain favors from politicians who create business regulations? Is that fair?

[converted_democrat]

14. No, I couldn't do it.. My SO and I own a business, and I could

not do it.. I know how hard we worked to build and maintain our business, and I could never ace someone out of the hard work it takes to have a business.. Now, if my product or my service is deemed superior by consumers, and that runs a company out of business that doesn't bother me.. (It's happened before, and I didn't feel guilty about it.) I don't think I could ever just run someone out of business for a bigger market share.. I don't think I would be able to sleep at night. It takes a lot of work to get a business up and going, and even more work to maintain it.. I couldn't "shit" on someones hard work like that..

[knitter4democracy]

15. Here's my real answer: it depends.

If they run a good business, and our businesses complement each other, no way would I do what I could to eliminate that competition. If they run a bad business, then I have no problem with outselling them and putting them out.

See, I've been working on opening up my own yarn shop for a few years. It's on hold due to poor health, but now that I've had surgery, I'm looking into it again. There's a quilt shop in town that sells some yarn, and that's it. The owner is cranky (sometimes to the point of being mean), her prices are too high, her selection is very limited, and she offers almost no classes or help. I've often thought that I could buy out her inventory and take over her market share.

If she'd been doing good business all these years, though, I would send customers her way. She'd have things I wouldn't, so it would help the customers to do that and keep us both up and running. That's good business in our area.

Actually, though, I'm considering offering her some help to up her sales, even though I might open up my own shop in two or three years. It's just sad to see a bad yarn shop.

[Squatch]

16. Hell yes, I would try.

That's the whole idea about seeking increasing market share. Why would I spend money on advertising, etc if I knew that I, personally, would not allow it to result in increasing market share?

[KharmaTrain]

17. Fair Competition Isn't Always Fair

I've been in several situations where I've "run a competitor out of town"...and felt very, very good about doing it. I worked in radio and forcing your competitor to change format was always a big deal. It's part of my business and this was the job I was hired to do. It didn't close the business, just forced them to make changes...and in turn they could then force me to make changes.

In many cases the competitor did something stupid on their own front...over or under-spent on promotion and other financial mismangement that took them down without me lifting a finger. Other times the marketplace had changed...people in the 90's weren't too interested in hearing Montovani records...and those that changed with the times would thrive.

When you say "fair competition"...be careful what you ask for...especially when it comes to small business. Usually that term means protectionism that prevents new businesses from cracking in and produces laws that can, in the long-term, hurt competition not increase it.