Meet the Four-Eyed, Eight-Tentacled Monopoly That is Making Your Glasses So Expensive

Forbes Link

"...Meet the four-eyed, eight-tentacled monopoly that is making your eyeglasses so darned expensive. Luxottica estimates that at least half a billion people around the world are currently wearing their glasses. I don’t know about you, but I am pushing them up my nose right now.

Luxottica controls 80% of the major brands in the $28 billion global eyeglasses industry. This monopolistic structure of the market leads to profits that are “relatively obscene,” says Tim Wu, a professor of law at Columbia University and the author of The Master Switch. In a speech given at this year's annual conference for New America, a Washington, D.C.-based think tank, Wu remarks that products in some industries seem to only get better and cheaper -- laptops, for example -- while other products, like eyeglasses, remain strangely pricey, with only superficial innovation.

The difference is due to market structure. Because it controls so many prominent brands and retail chains, Luxottica is what economists call a price maker. That means it can set the price of its goods near the highest amount that consumers would be willing to pay for them, unlike more competitive industries, in which competition both encourages constant innovation and forces the price of goods down..."

Increasingly, our economy is moving towards a monopolistic/oligopolistic model where consumers are given no choice or only the illusion of it. This is a distortion of capitalism that must be fixed. An unwillingness to fix it is going to give socialism and communism an audience.

Another example is what has happened to the airline industry. The Sprint/Tmobile merger will bring the number of cell phone providers down to 3. Expect higher prices down the road. The rental car industry is another example:

Car Rental Companies Discover Mergers, and You're Going to Pay for It
While you weren't looking, Hertz and Avis followed the airline playbook to maximize profit.
LINK

There's nothing wrong with a company attempting to maximize profit, but when two competitors attempt to do so by deliberately trying to move the market to an oligopolistic or monopolistic model, that's a problem.
This isn't how any of this was supposed to work.

Some modest reform proposals:

- Make it illegal for workers and contractors to receive shares of stock as compensation.
- Make corporate M&A activity illegal as it directly reduces the number of competitors in any market sector.
- Start breaking up some of the monopolies that do exist in the market.

Self awareness is an important thing to have.