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No, that's not what happens. This is a classic situation with a stable Nash equilibrium where the best for all competitors is to keep the price high. They know
by semi-extrinsic 9y ago
No, that's not what happens. This is a classic situation with a stable Nash equilibrium where the best for all competitors is to keep the price high. They know the current price is affordable enough that people will keep paying.
Think about gasoline prices back when crude oil prices suddenly fell off a cliff. Did gas prices at your local station drop? No, not one cent. All of the competing stations kept the prices roughly where they were and raked in increased profits.
- scrumper 9y agoI know it’s not the main point you’re making, but gas prices near me (north east USA) absolutely did drop a lot when oil plummeted.
- IanCal 9y ago> Think about gasoline prices back when crude oil prices suddenly fell off a cliff. Did gas prices at your local station drop? Petrol prices in the UK definitely have dropped (30% over four years, not including inflation) http://www.racfoundation.org/data/uk-pump-prices-over-time http://www.racfoundation.org/data/uk-pump-prices-over-time