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I get what you're saying, but profit creates the same motivation for vertical integration. If there are two layers in my coffee bean acquisition I'm losing the

I get what you're saying, but profit creates the same motivation for vertical integration. If there are two layers in my coffee bean acquisition I'm losing the profit made at every layer, so of course I would want to own those layers and capture that profit before we even add a 1% tax. But vertical integration comes at a risk, which is why only the biggest players will attempt it. Now, add a 1% transaction to those two layers. You're now losing 2.01%. But at each layer you're already losing 15% net profit made by your supplier. I'm not sure you would change your perspective on vertical integration for 2% when you're already leaving 15-20% on the table.

sokoloff 9y ago
Agreed in large part, though it still incents high hurdles for new upstarts to compete with successful incumbents. I wonder if we wouldn't see a shift in grocery store form with the substance remaining as today. Rather than buying a bottle of Coke from Star Market, you might be buying a consigned bottle of Coke, with Star Market serving only as the marketplace (avoiding Star buying the bottle from Coke), and where Coke is paid directly by you as part of the transaction. Grocers operate on a terribly thin net margin as it is. They would have a lot of incentive to avoid additional transactions in the supply chain (and there's some societal benefit to keeping grocery prices low). I'm not so much arguing against [though I do oppose a transaction tax] as I am brainstorming how the implementation of such a tax would create different behaviors in the market to compensate or avoid the tax.