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Competition all but guarantees it, if there's competition.

FussyZeus 10y ago
That's what I'm getting at. How many people price shop for household items and food? The majority I know have a brand that they buy all the time because of any number of reasons, and if the price doesn't go up but just stays where it is, how likely are they to change?
- stale2002 10y ago
  They why wouldn't companies just do that right now? If companies can make more money, they would already be doing that by raising prices!
  - FussyZeus 10y ago
    If the cost of manufacture and shipping goes down, and the price stays the same, the company makes more money and it isn't immediately obvious to the consumer that anything changed.
    - harryh 10y ago
      Historically prices of goods to consumers have dropped dramatically as automation and globalization have reduced the costs of production. Your hypothesis that most of the gains would be captured by producers in the form of increased profits is wrong for almost all consumer goods.
      - fjjrxcbdhx 10y ago
        Citation needed. Over the last couple decades processed foodstuffs have been constant in price, but the portions have decreased to cut costs. You can play Russian dolls with old cereal boxes, fitting the newer ones inside the old ones.
        harryh 10y ago
        All you have to do is look around and see how much stuff people have. People have enormous amounts of stuff compared to even 20 or 30 years ago. Bigger houses. More cars. TVs. Computers. Smart Phones. And it's all, relatively speaking, dirt cheap. It's so cheap that storage units are a booming business because people don't have room to store all their stuff in their homes. It's so cheap that burglaries aren't even a thing anymore really because stuff is so cheap it isn't even worth stealing. It's so cheap that Marie Kondo has a best selling book about the challenges of getting rid of your stuff because you simply have too much of it. Healthcare is expensive. Education is expensive. Land (in some places) is expensive. But man stuff. Stuff is cheap.
        brianlweiner 10y ago
        Between 1960 and 2007, the share of disposable personal income spent on total food by Americans, on average, fell from 17.5 to 9.6 percent http://www.ers.usda.gov/data-products/chart-gallery/detail.aspx?chartId=40094&ref=collection&embed=True http://www.ers.usda.gov/data-products/chart-gallery/detail.a...
        sverige 10y ago
        Correct. While producers of the raw materials (corn, wheat, rice) have seen prices decline when adjusted for inflation, the producers of finished products (Corn Flakes, Wheaties, etc.) have seen prices rise even when adjusted for inflation. But there are only four or five big middlemen, so it's a lot easier for them to capture the increased margins than the tens of thousands of farmers who produce the raw materials. Similarly, if Apple could reduce its shipping costs to near zero by teleporting the raw materials to Foxconn and then teleporting the finished goods directly to retail outlets, they'd still charge $600 per iPhone, even though they have competition from other phone makers in the form of Android. The Invisible Hand doesn't always work the way it did in Adam Smith's time.
falcolas 10y ago
Competition will disappear, if companies start having excess liquid assets due to reduced costs. That competition will be lobbied, bought, or acquired right out of the space they were competing in. Capitalism has a tendency to optimize for a monopoly.

That's what I'm getting at. How many people price shop for household items and food? The majority I know have a brand that they buy all the time because of any number of reasons, and if the price doesn't go up but just stays where it is, how likely are they to change?

stale2002 10y ago
They why wouldn't companies just do that right now? If companies can make more money, they would already be doing that by raising prices!
- FussyZeus 10y ago
  If the cost of manufacture and shipping goes down, and the price stays the same, the company makes more money and it isn't immediately obvious to the consumer that anything changed.
  - harryh 10y ago
    Historically prices of goods to consumers have dropped dramatically as automation and globalization have reduced the costs of production. Your hypothesis that most of the gains would be captured by producers in the form of increased profits is wrong for almost all consumer goods.
    - fjjrxcbdhx 10y ago
      Citation needed. Over the last couple decades processed foodstuffs have been constant in price, but the portions have decreased to cut costs. You can play Russian dolls with old cereal boxes, fitting the newer ones inside the old ones.
      - harryh 10y ago
        All you have to do is look around and see how much stuff people have. People have enormous amounts of stuff compared to even 20 or 30 years ago. Bigger houses. More cars. TVs. Computers. Smart Phones. And it's all, relatively speaking, dirt cheap. It's so cheap that storage units are a booming business because people don't have room to store all their stuff in their homes. It's so cheap that burglaries aren't even a thing anymore really because stuff is so cheap it isn't even worth stealing. It's so cheap that Marie Kondo has a best selling book about the challenges of getting rid of your stuff because you simply have too much of it. Healthcare is expensive. Education is expensive. Land (in some places) is expensive. But man stuff. Stuff is cheap.
      - brianlweiner 10y ago
        Between 1960 and 2007, the share of disposable personal income spent on total food by Americans, on average, fell from 17.5 to 9.6 percent http://www.ers.usda.gov/data-products/chart-gallery/detail.aspx?chartId=40094&ref=collection&embed=True http://www.ers.usda.gov/data-products/chart-gallery/detail.a...
      - sverige 10y ago
        Correct. While producers of the raw materials (corn, wheat, rice) have seen prices decline when adjusted for inflation, the producers of finished products (Corn Flakes, Wheaties, etc.) have seen prices rise even when adjusted for inflation. But there are only four or five big middlemen, so it's a lot easier for them to capture the increased margins than the tens of thousands of farmers who produce the raw materials. Similarly, if Apple could reduce its shipping costs to near zero by teleporting the raw materials to Foxconn and then teleporting the finished goods directly to retail outlets, they'd still charge $600 per iPhone, even though they have competition from other phone makers in the form of Android. The Invisible Hand doesn't always work the way it did in Adam Smith's time.

falcolas 10y ago

Competition will disappear, if companies start having excess liquid assets due to reduced costs. That competition will be lobbied, bought, or acquired right out of the space they were competing in. Capitalism has a tendency to optimize for a monopoly.