What of companies that spend millions analysing markets before setting their prices? That seems to involve deep modelling, yet is canonically seen as trade.
They usually don’t have any way to leverage their models to increase the cost of not buying their product or service though; so such a situation is still missing at least one criterion.
There is a complication involved since its possible to increase the cost to others of not doing business with you in “fair” ways. E.g. the invention of the fax machine reduced effective demand for message boys to run between office buildings, hence increasing their cost and the operating costs of anyone who refused to buy a fax machine.
Though I don’t believe any company long held a monopoly on the fax market, if a company did establish such a monopoly in order to control prices that again may be construed as extortion.
They usually don’t have any way to leverage their models to increase the cost of not buying their product or service though; so such a situation is still missing at least one criterion.
Modern social networks and messaging networks would seem to be a strong counterexample. Any software with both network effects and intentional lock-in mechanisms, really.
And honestly, calling such products a blend of extortion and trade seems intuitively about right.
To try to get at the extortion / trade distinction a bit better:
Schelling gives us definitions of promises and threats, and also observes there are things that are a blend of the two. The blend is actually fairly common! I expect there’s something analogous with extortion and trade: you can probably come up with pure examples of both, but in practice a lot of examples will be a blend. And a lot of the ‘things we want to allow’ will look like ‘mostly trade with a dash of extortion’ or ‘mostly trade but both sides also seem to be doing some extortion’.
What of companies that spend millions analysing markets before setting their prices? That seems to involve deep modelling, yet is canonically seen as trade.
They usually don’t have any way to leverage their models to increase the cost of not buying their product or service though; so such a situation is still missing at least one criterion.
There is a complication involved since its possible to increase the cost to others of not doing business with you in “fair” ways. E.g. the invention of the fax machine reduced effective demand for message boys to run between office buildings, hence increasing their cost and the operating costs of anyone who refused to buy a fax machine.
Though I don’t believe any company long held a monopoly on the fax market, if a company did establish such a monopoly in order to control prices that again may be construed as extortion.
Modern social networks and messaging networks would seem to be a strong counterexample. Any software with both network effects and intentional lock-in mechanisms, really.
And honestly, calling such products a blend of extortion and trade seems intuitively about right.
To try to get at the extortion / trade distinction a bit better:
Schelling gives us definitions of promises and threats, and also observes there are things that are a blend of the two. The blend is actually fairly common! I expect there’s something analogous with extortion and trade: you can probably come up with pure examples of both, but in practice a lot of examples will be a blend. And a lot of the ‘things we want to allow’ will look like ‘mostly trade with a dash of extortion’ or ‘mostly trade but both sides also seem to be doing some extortion’.
The cost of not buying is not the same thing as the cost of switching.