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> The problem is not that companies are able to increase prices and improve their margins. That's good! That's going a bit too far. Under perfect competition t

by zopa 4y ago

> The problem is not that companies are able to increase prices and improve their margins. That's good! That's going a bit too far. Under perfect competition there aren't any profit margins: everything sells at marginal cost. Real-world markets won't be like this, but they can get reasonably close. If there are large and increasing profit margins, that's a sign something has gone wrong. Also, we need to be realistic about natural monopolies. Sometimes the competition we want isn't in the cards, and treating the symptoms really is the right answer. If that necessary-but-low-volume medication has sharply declining costs with increasing production, as many things do, there just aren't going to be enough suppliers to build a competitive market. Competition policy is great, but it can't do everything.

MichaelZuo 4y ago
Under perfect competition, no one will invest in anything. So it does not seem very desirable.
anigbrowl 4y ago
Under perfect competition there aren't any profit margins: everything sells at marginal cost. True, but that includes the cost of capital, so liquidity theoretically remains adequate and capital provision/replacement is just a business function rather than the business function. The problem with capitalism is that it's totalizing; the idea that the whole point of society should be making more and more wealth forever is kind of ridiculous when you think about it, like deciding that it'd be great for your social body to get diabetes. It's ridiculous in the same way that pure laborism would be (everyone should work hard, never mind at what) or pure consumerism (everyone should have all the stuff they want, all the time).
ethbr0 4y ago
Point. I should have more accurately said "The problem is not that companies are attempting to increase prices and improve their margins..." Obviously the goal of a functioning system would be that they run into competition restraining them from doing so. And 100% agreed on natural monopolies, although I believe the classification should be the exception rather than risk being a rule for "things we don't like."

by zopa 4y ago

MichaelZuo 4y ago

Under perfect competition, no one will invest in anything. So it does not seem very desirable.

anigbrowl 4y ago

Under perfect competition there aren't any profit margins: everything sells at marginal cost. True, but that includes the cost of capital, so liquidity theoretically remains adequate and capital provision/replacement is just a business function rather than the business function. The problem with capitalism is that it's totalizing; the idea that the whole point of society should be making more and more wealth forever is kind of ridiculous when you think about it, like deciding that it'd be great for your social body to get diabetes. It's ridiculous in the same way that pure laborism would be (everyone should work hard, never mind at what) or pure consumerism (everyone should have all the stuff they want, all the time).

ethbr0 4y ago

Point. I should have more accurately said "The problem is not that companies are attempting to increase prices and improve their margins..." Obviously the goal of a functioning system would be that they run into competition restraining them from doing so. And 100% agreed on natural monopolies, although I believe the classification should be the exception rather than risk being a rule for "things we don't like."