> if the market was working correctly Amazon's profits would be driven down to zero and you'd effectively have this
Are you sure? Consumer behavior seems to be to simply go to their default marketplace rather than to search the whole internet (which is slow, painful, and low-trust), so it ends up being a winner-take-all system where alternative marketplaces like eBay are almost irrelevant and Amazon charges whatever they like and basically ignores counterfeiting and review fraud.
There are "natural monopolies", like with roads and power distribution networks, and I would argue that online marketplaces have turned out to be another one, and we should modify our public policy to reflect that.
Are you sure? Consumer behavior seems to be to simply go to their default marketplace rather than to search the whole internet (which is slow, painful, and low-trust), so it ends up being a winner-take-all system where alternative marketplaces like eBay are almost irrelevant and Amazon charges whatever they like and basically ignores counterfeiting and review fraud.
There are "natural monopolies", like with roads and power distribution networks, and I would argue that online marketplaces have turned out to be another one, and we should modify our public policy to reflect that.