3 ms·
No coordination needed in a supply limited scenario with sufficiently inelastic demand. That's not a prisoner's dilemma. In that case every single bag has multi
by xoa 6y ago
No coordination needed in a supply limited scenario with sufficiently inelastic demand. That's not a prisoner's dilemma. In that case every single bag has multiple potential interested buyers, which means each supplier can individually have buyers bid against each other and see the sale price go up. Organization of course might let them do even better, but it's not necessary. There is no market share to be gained from the supplier point of view (though as the article says, those higher up the chain may have different motives and margins) because supply just can't be ramped up instantly with a good like coffee. It doesn't matter if a farmer would in principle like to have 10x as much to sell, they have what they grew, and could only respond to demand by increasing supply slowly (and there is the risk of overshoot). If they don't raise prices they're just leaving money on the table, since every bag will get bought.