Amazon has the Ability to Set Prices

Amazon has the ability to set prices, which can have major consequences and destroys competition.

“If Amazon now controls the pricing in the book industry, just imagine what it can do in the broader world of retail” — Alex Shepard

Being able to set prices in a market is a distinguishing characteristic of a monopoly. Those who can set their own prices and still hold control of a market have complete control and are detrimental to capitalistic societies. Price fixing is considered illegal in the United States and many other countries. In the book industry, Amazon ran many competitors out of business by setting lower prices that no one else could compete with, then raised them back up after destroying their competition. With control over the book industry, Amazon has positioned itself to do the same in other industries.

Shepard, Alex. “How Amazon Is Changing the Whole Concept of Monopoly.” The New Republic, 19 Jun 2017, https://newrepublic.com/article/143376/amazon-changing-whole-concept-monopoly. Accessed 11 Nov. 2017.

Amazon has continued to expand into new markets and poses a long-term risk to the United States with the current rate they are growing in

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“Now Amazon is seeking to become the company when you say to yourself, ‘I’m going to go buy something’ you think Amazon” —Alex Shepard

Amazon is currently in the retail, e-book and other industries. In 2017, Amazon purchased Whole Foods for 13 billion dollars. Immediately after the purchase, Amazon’s stock went up by more than 13 billion dollars. This is the opposite of what is supposed to happen, and a sign of Amazon’s shear power. This has allowed Amazon to expand into the grocery industry and a sign of what is to come. They use their size and nearly unlimited access to capital to do so. Rapidly expanding into many different markets is also a characteristic of past monopolies, such as the 19^th century railroad. Looking at Amazon’s recent moves, it seems they have a goal of having as much power possible and are constantly looking to enter new markets. These moves must be monitored and regulated by the government, and if not, there could be fatal consequences.

Amazon controls multiple aspects of the book industry, which is detrimental to Fair Trade

“Fair Trade provides the archetype for “relational” chains, where buyer/supplier cooperation and power sharing prevail” —Laura T. Raynolds

Amazon owns their own publishing service called AmazonEncore, while controlling the sale of all books through their website. Also, many other publishers rely on Amazon for sales, which in turn puts them at the mercy of Amazon. Amazon’s competitors also rely on their successful online retail service to sell

images products, which gives Amazon an unfair advantage over their competitors and puts them in a position of power over the whole industry. The publishers will go out of business if they do not sell books online with Amazon. AmazonEncore is in direct competition with the publishers who rely on Amazons online retail service. This gives Amazon the edge over everyone else in the industry and creates a conflict of interest. The leverage Amazon has over their competition goes against fair trade, which is one of the key aspects of a capitalistic society.

Raynolds, Laura T. “Mainstreaming Fair Trade Coffee: From Partnership to Traceability.” vol. 37, no. 6, June 2009, pp. 1083–1093. World Development, doi:10.1016/j.worlddev.2008.10.001.