The validity of that argument is strongest when dealing with a competitive marketplace, both on the supplier and on the consumer side. For instance, there is a large, competitive pool of people willing to work in fast food places. There is also a large pool of businesses willing to hire fast food workers that, although not quite as competitive as the worker pool, is still reasonably competitive. Thus, one can expect fast food workers’ income to be a good starting point, perhaps biased in the downward direction (although other effects such as minimum wage laws may bias it upwards). Microsoft, on the other hand, is a monopoly, and its immediate consumers are often large corporations that also are not completely competitive. Thus, this argument is significantly less valid.
The validity of that argument is strongest when dealing with a competitive marketplace, both on the supplier and on the consumer side. For instance, there is a large, competitive pool of people willing to work in fast food places. There is also a large pool of businesses willing to hire fast food workers that, although not quite as competitive as the worker pool, is still reasonably competitive. Thus, one can expect fast food workers’ income to be a good starting point, perhaps biased in the downward direction (although other effects such as minimum wage laws may bias it upwards). Microsoft, on the other hand, is a monopoly, and its immediate consumers are often large corporations that also are not completely competitive. Thus, this argument is significantly less valid.