There is a short article in The Economist (link below) where the writer makes the claim that because there are firms the exhibit economies of scale - in driverless technology - they will eventually drive out the fierce competition that occupies the current industry. Reasons for this is that falling average cost enables firms to produce more units, which get more testing and data: so, more date includes better safety and technology, resulting in more corporate partners/investment, implying an eventual crowding out of smaller firms.

What I think, is that monopolies - or even 2 or 3 firm oligopolies, although much more possible - don't typically form in this way. Natural monopolies form when markets cannot efficiently contain the introduction of another firm, which means there must be economies of scale and relatively low demand to keep out competitors. At least right now, in this market - which is driven primarily through software development - I don't see a monopoly forming.

Then there are barriers to entry. There aren't any on the books yet, but the article lists a few that could happen in theory, such as regulation and the curtailing of less safe/successful firms being ejected from the market. What are your thoughts? Thanks




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