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> What would the price of food be if all the farmers could collude to charge the profit-maximizing price? I don’t know, what would the price of food be if unic
by wyager 6y ago
> What would the price of food be if all the farmers could collude to charge the profit-maximizing price?
I don’t know, what would the price of food be if unicorns were real? Who cares; this is not a realistic scenario. Defection is handsomely rewarded in almost any realistic market, outside of a few narrow cases that have extra physical constraints (e.g. power and water delivery).
- AnthonyMouse 6y agoYou're proposing for price fixing agreements to be legal, at which point companies could enter into a contract to fix prices and be able to sue each other for defection in court. But also, what you're describing is already what happens in more consolidated markets that can coordinate without formal contracts enforced by the government, because defection isn't profitable if you expect the incumbent competitors to respond in kind.
- wyager 6y agoDefectors don’t have to be one of the contract participants. People are free to create new companies. Price-busting venture capital would be a whole industry if price-fixing was legal. It doesn’t even have to happen very often; the counterfactual possibility of getting busted is enough to keep price fixes reasonable.