Only firms with a dominant market share have both
the incentive and the wherewithal to invest in R&D and in subsequent
branding and marketing.
But oligopolies in deregulated markets have sometimes substituted price
fixing, extended intellectual property rights, and competitive
restraint for market regulation. Still, Schumpeter believed in the
faculty of "disruptive technologies" and "destructive creation" to
check the power of oligopolies to set extortionate prices, lower
customer care standards, or inhibit competition.
Linux threatens Windows. Opera nibbles at Microsoft's Internet
Explorer. Amazon drubbed traditional booksellers. eBay thrashes Amazon.
Bell was forced by Covad Communications to implement its own
technology, the DSL broadband phone line.
Barring criminal behavior, there is little that oligopolies can do to
defend themselves against these forces. They can acquire innovative
firms, intellectual property, and talent. They can form strategic
partnerships. But the supply of innovators and new technologies is
infinite - and the resources of oligopolies, however mighty, are
finite. The market is stronger than any of its participants, regardless
of the hubris of some, or the paranoia of others.
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