We should dispel the illusionthat large corporations compete freely with each other so monopoly requires something like 75% -80% of market share.
In reality even a (consistent) 20% market share is pretty much good enough IMHO. You have a bunch of corporations, each taking about 20% and they will collude 100%.
While I agree that large firms often collude, we do have laws against that in the U.S. In fact, I believe FAANG has gotten into trouble before for collusion on hiring practices. But those are different laws than the ones against monopolies.
I would not be totally surprised to hear that, for example, Google and Facebook collude on advertising, but I'm not at this point totally convinced of it either.
Most markets are dominated by small players that implicitly collude to keep prices up.
Investment Banking can be like that - they will never, ever give you a deal on fees. That's more cultural but it illustrates the point. There's no 'official policy' for rates and yet they won't compete there.
Credit cards will never, ever give you a break that's not out of bounds. Visa fees should be a fraction of what they are.
In Canada, we have about 7 major banks, all the rest are tiny, it's almost impossible to break in. They print profits and will not compete on fees.
This happens because we've understood oligarchy for a very long time. A CEO/PM at an institutional bank knows very well that if he lowers his price, that the immediate response by the market will be price matching and erasure of gains for everyone.
FYI this is one of the big reasons why mature industries are so slow moving.
If there are many competitors in a commodity market, this doesn't work because 'someone' will cut their prices, and profits will be reduced until competing entities can't compete or find an equilibrium.
You can generally find these oligarchic situations by looking at profits. If you're looking at an established industry of 3-7 players and they all have high margins and profits, that's usually a sign of implicit collusion because in any normal circumstances those margins would erode over time.
> In Canada, we have about 7 major banks ... They print profits and will not compete on fees.
How does this happen with 7 competitors? What stops one of them undercutting the others and winning customers? Is it that retail banking customers aren't that price elastic and there's too many frictions involved for a customer to switch?
Any market with high barriers to entry exhibits this.
Banking is very heavily regulated in Canada it's almost impossible to start a new bank. Banks have a very low churn and citizens are already banked.
The ATM system is a cabal, owned by the banks, and they get massive fees from that. That's a form of almost direct collusion and anti-competitive practice to some extent, as nobody could feasibly compete with the installed base of ATM machines.
This happens in other industries and they are smart enough to know now to reduce their prices because it will gain them nothing.
Canada is also a different place in that there is a much greater focus on stability than innovation. Canada does not have economies fluctuations that are created internally - all booms/busts are driven primarily by external/US speculative activity. Canadian consumers are risk averse, much more trusting of institutions and brands. They like 'safe, clean, well lit places with products they know and understand'. It's a actually good for civility but a big hamper on new innovation.
In reality even a (consistent) 20% market share is pretty much good enough IMHO. You have a bunch of corporations, each taking about 20% and they will collude 100%.