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Lemme guess, were you working in google leadership when they were conspiring with Apple to unlawfully fix wages? Market forces are not magic pixie dust. The a
by nullc 4y ago
Lemme guess, were you working in google leadership when they were conspiring with Apple to unlawfully fix wages?
Market forces are not magic pixie dust. The actions of market participants are what create the market in the first place. Colluding to fix prices, assuming the collusion is widespread enough absolutely impacts prices. That the buyers ability/willingless to pay limits the maximum amount of rent extraction (har har) doesn't change this fact: the equilibrium in the presence of competitive pricing is still different than in its absence.
Even partial collusion can still have an effect similar to removing the units from the market, and this effect is outsized when the market's supply is already very limited. Say a collusion only controls 400 units in a market of 20,000 (like, say, mountain view)-- you wouldn't argue that demolishing those units would have no substantial impact on prices, so you shouldn't argue that removing price competition among them wouldn't either.
- jeffbee 4y agoApple, Intel, Adobe, Google, Pixar, and Intuit collectively control a huge share of the local employment market for software developers. That puts their collusion into a different category altogether. Why cartels can't work in industries with numerous competitors is literally an Econ 101 topic. Historic cartels only succeed with majority market share and high concentration among a few players. We don't see anything like that in real estate. Not even remotely close. Your example also doesn't make sense to me. A cartel controlling 2% of the inventory of apartments in a city holds a few apartments off the market. This would indeed raise the equilibrium price, but doesn't benefit the cartel participants. All the excess profits in that scenario are flowing to non-participants. It's the perfect backwards cartel!