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> Increasing profit margin requires either increasing price per unit or decreasing cost per unit. Literally, the article in question stated that price per unit

> Increasing profit margin requires either increasing price per unit or decreasing cost per unit. Literally, the article in question stated that price per unit has been rising while costs stayed the same. > Increasing price per unit would send customers to competitors. Not if competitors did it too. > Only a monopolist can just 'decide' to double their profit margins. No. Or at least we’d have to broaden the definition of monopoly. Eg my local grocery store can raise prices a lot (maybe 25% even) before the cost compels me to drive to a farther-away store, but even then I’d assume the other stores were higher and not bother. Maybe it’s a monopoly in the sense “the only grocery store vineyardmike can walk to” but it’s hardly a monopoly. Relatedly, California has announced they’re suing big oil companies for all raising prices without seeing a cost increase, and there are national politicians that want to fix the price of oil to cap its profit margins short term in response to the price increases in 2022 (which are unrelated to the cost of producing oil).

finspeech 4y ago
Increased profit margins can be entirely explained by an increase in the money supply (remember those pandemic stimulus checks). Supply of goods stayed the same, or even decreased as people stopped working and producing, and the supply of money increased. More dollars chasing the same (or less) amount of goods. That alone can explain increased profit margins. If you’re claiming corporate greed or monopolistic abuse then you must explain why these companies weren’t doing this all along. Why have they all decided to increase their prices together all of the sudden? Occam’s razor applies here. Now let’s walk through how price increases actually occur. During the pandemic, people started buying out all the toilet paper at their local grocery store. When this happens, what does the grocer do? They put in an even larger order in for more toilet paper than they usually do as they see they are selling out quickly. After all they want to make sure they are stocked up for their customers. Well, all the other grocers around the country and the world are doing the same thing. Unfortunately, the TP co. only has so much supply and production capacity, so they sell to the highest bidder. Now the grocery stores that were able to procure the TP, had to pay a higher price than usual. Of course they want to make a profit so they will have to increase the prices they charge to customers. And if people are spending more money on TP, then that means that have less money to spend on something else. So just because one industry sees increased profits, doesn’t mean they all do. In fact, it means other industries see lower profits. Now apply this dynamic to the oil market/industry. And California seems to be uniquely an outlier in terms of gas prices compared to the rest of the country. Is it either a.) oil companies are extorting Californians for some reason, or b.) onerous regulations California has put on fossil fuels and oil companies that has cause the price of oil to be so high compared to other states? Again, Occam’s razor

finspeech 4y ago

Increased profit margins can be entirely explained by an increase in the money supply (remember those pandemic stimulus checks). Supply of goods stayed the same, or even decreased as people stopped working and producing, and the supply of money increased. More dollars chasing the same (or less) amount of goods. That alone can explain increased profit margins. If you’re claiming corporate greed or monopolistic abuse then you must explain why these companies weren’t doing this all along. Why have they all decided to increase their prices together all of the sudden? Occam’s razor applies here. Now let’s walk through how price increases actually occur. During the pandemic, people started buying out all the toilet paper at their local grocery store. When this happens, what does the grocer do? They put in an even larger order in for more toilet paper than they usually do as they see they are selling out quickly. After all they want to make sure they are stocked up for their customers. Well, all the other grocers around the country and the world are doing the same thing. Unfortunately, the TP co. only has so much supply and production capacity, so they sell to the highest bidder. Now the grocery stores that were able to procure the TP, had to pay a higher price than usual. Of course they want to make a profit so they will have to increase the prices they charge to customers. And if people are spending more money on TP, then that means that have less money to spend on something else. So just because one industry sees increased profits, doesn’t mean they all do. In fact, it means other industries see lower profits. Now apply this dynamic to the oil market/industry. And California seems to be uniquely an outlier in terms of gas prices compared to the rest of the country. Is it either a.) oil companies are extorting Californians for some reason, or b.) onerous regulations California has put on fossil fuels and oil companies that has cause the price of oil to be so high compared to other states? Again, Occam’s razor