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I have a family friend that owns gas stations. He always says that gas prices have a tendency to "take the elevator up and the stairs down". There doesn't have

I have a family friend that owns gas stations. He always says that gas prices have a tendency to "take the elevator up and the stairs down". There doesn't have to be explicit collusion. People that have large amounts of capital know whats best for them and are very judicious when it comes to lowering prices.

jmalicki 4y ago
There's a famous economics paper arguing this based on microeconomic factors, and that this is largely a reason why recessions happen. As you implied, "sticky prices can be both privately efficient and socially inefficient." and " Private incentives produce too much price adjustment following an expansion in aggregate demand and too little price adjustment following a contraction in aggregate demand." https://scholar.harvard.edu/files/mankiw/files/small_menu_costs.pdf https://scholar.harvard.edu/files/mankiw/files/small_menu_co...