Raising Rivals' Costs through Cattiness

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Textbook Definition of Monopoly: Unlike a competitive market, a monopoly is a market in which a single firm supplies all of the output and is therefore capable of setting prices, subject to market demand. Monopolists have "market power," unlike firms in a competitive market. Not surprisingly, firms would like to be monopolies, since higher prices mean higher profits and happier shareholders.

Is it illegal to be a monopolist? It depends. If you gain market power by being "awesome," (e.g., by designing a better computer chip than your rivals by virtue of your being smarter and more talented than your rivals) you have done nothing wrong. On the other hand, securing a monopoly through "bad acts," ("monopolization") is NOT COOL, and is in fact prohibited under the Sherman Act. The question of what constitutes monopolization is somewhat long and boring, but one way that firms may monopolize a market is through raising rivals' costs.

Let's consider a simple (and rather unrealistic) example: suppose the competitive market for cheese consists of several firms in Wisconsin, and one firm in California. Suppose the greedy Californian decides to attempt to monopolize the cheese market by convincing legislators to increase the environmental standards for Wisconsin dairy farmers, but NOT for California farmers. As soon as the legislators accept the Californian's request, regulatory costs for Wisconsin farmers rise, and consequently, the Wisconsin firms incur losses and exit the market. By raising his (or her?) rivals' costs, the Californian has now monopolized the cheese market. Victory for California farmers.

She-conomic Analysis: OKAY. How does this relate to dating? First of all, if my roommate gets more dates than me simply because she is more beautiful, funny, and compassionate, I might get angry, but she has done nothing wrong. Sure, AMD may envy Intel for Intel's market power, but since Intel acquired market power by "sheer awesomeness" and not by "bad acts," Intel, like Pretty Roommate, did nothing wrong. On the other hand, if Pretty Roommate monopolized the dating market by raising her rivals' costs of dating (rivals = me and other girls from school, church, etc.), thereby inducing them to exit the dating market, her rivals certainly have reason to revolt. How might Pretty Roommate raise her rivals' costs, you wonder? Through random acts of cattiness.

I think the classic example of this is how the step-sisters in Cinderella raise Cinderella's costs of going to the ball by destroying her gown right before the party. (If it weren't for the Fairy Godmother, surely Cinderella's costs of making a new dress and securing transportation before Midnight would have been prohibitive, causing her to suffer a "loss" and "exit" the Prince's dating market.) Does this happen in "real" dating life? I tend to stay clear of the cattier crowd, but observational data suggests that,yes, sometimes girls do try to sabotage their peers' dating opportunities by spreading gossip and using unkind words to damage their friends' self-esteem (date-purchasing-power). In extreme cases, I'm sure there are even girls out there who attempt to make their roommates uglier by hiding their makeup, stealing their curling irons, and maybe even feeding them one too many baked goods. . . .

Now, I'm not saying that all or even most girls (or guys) engage in this type of behavior. Nonetheless, the anticompetitive and, frankly, heinous consequences that occur when individuals do successfully raise rivals' dating costs are disheartening to say the least. So, as a market participant, I am all for making monopolization per se illegal--maybe not through a Sherman Anti-"Mean Girl" Act--but by doing my part to NOT be the evil stepsister and by giving the evil eye to any other girls who play that role.