4 ms·

did we expect something else? When corporations have pricing power they are legally obligated to the share holders to maximize profits. I'm not advocating for

did we expect something else? When corporations have pricing power they are legally obligated to the share holders to maximize profits. I'm not advocating for or against. It's unfortunate everyone agrees on the situation. - profit seeking corps. - limited competition due to market consolidation and limited supply chains. - wage inflation due to limited workers because of aging population, limited immigration, low birth rates, skills gaps, geography gaps, . -

mint2 4y ago
They are not legally mandated to do that - that’s a group think developed largely by shareholders without morals.
- s1artibartfast 4y ago
  The challenge is people are obviously split on whether that is moral Behavior or not. For example I think it is perfectly moral. Nobody is forcing me to buy eggs. I don't have a right to someone else's eggs. When I don't like the price, I buy a different protein. Over the last several months, I found myself buying a lot more pork, often for less than 90 cents a pound.
didgeoridoo 4y ago
Except basic microeconomics demonstrates that profit is maximized when production is raised to the point where marginal revenue equals marginal cost. Semiconductor fabrication is one thing, because cost of entry is astronomical. But these are chickens we’re talking about. We are probably just seeing the effects of egg producers trying to avoid a bullwhip effect where in two years we are drowning in eggs because the market over-responded. So, they limit investment in production increases today while enjoying the result of an exogenous supply shock on prices. Poof: record profits. What else should we do? Price controls? They provably cause more harm than good. Force companies to invest in egg production? Ridiculous overreach. The market will adapt, people will reduce egg consumption (perhaps durably), and we can play out the counterfactual in 20 years to see if the egg industry shot itself in the foot or not.
- stephencanon 4y ago
  > Except basic microeconomics demonstrates that profit is maximized when production is raised to the point where marginal revenue equals marginal cost. Basic microeconomics demonstrates that this holds true _in a competitive market_. The record profits tell us that prices have come decoupled from marginal cost, from which we can conclude that major egg producers have been allowed to merge to a point such that the market is no longer competitive.
  - mech765 4y ago
    This is the short term during a market disruption where supply is constrained due to an avian flu outbreak. Long term prices will fall back to normal. The difference between the cheap eggs of 2 years ago and the expensive eggs of today is not that too many egg companies merged. Blaming all high prices on anticompetitive behavior is throwing the baby out with the bathwater.
  - didgeoridoo 4y ago
    > in a competitive market Yes, hence my point about semiconductor fabs vs. hen cloacas. You can’t just point to a single product type undergoing a price shock and declare the market has failed. Preferences are sticky, but substitutes abound. People will adjust their preferences, and egg consumption will drop. If prices stay high, other products will begin to take the place of eggs in various contexts. We aren’t entitled to cheap eggs, but neither are the producers guaranteed record profits beyond a quarter or two. This too shall pass.
    - stephencanon 4y ago
      Preference for eggs is remarkably sticky; there effectively is no substitute good for most uses.
- locococo 4y ago
  Only considering market forces and saying the market will fix itself is a shortsighted argument. We live in a society and the market does not factor in societal impacts in terms of the "greatest good". Markets need a balancing counter force to make sure eggs are not only available to the rich and the poor are exposed to malnutrition. I say this because in the US we have this dominant idea that there is nothing better than not interfering with the market while forgetting that the market is only valuable to society if it serves our greater good. The statement that price controls do more harm than good is not true in a general sense. When society chips in to save banks no one seems to have a problem with that, try to make eggs affordable is blatant overreach.
SilverBirch 4y ago
It's really not productive to try and trace this back to an obligation to maximize profits. Firstly, it's not true according to the Supreme Court. And secondly, even we accept that it's something corporations should do or are doing, there are a million ways to judge what would be the maximally profitable strategy. You could say that they should jack up prices to maximize profits, but that's just one strategy for maximizing profits. They could lower prices in order to gain customer loyalty for example instead. In this case, the limited competition isn't due to market consolidation, it's due to a disease wiping out a load of the supply.

mint2 4y ago

They are not legally mandated to do that - that’s a group think developed largely by shareholders without morals.

s1artibartfast 4y ago
The challenge is people are obviously split on whether that is moral Behavior or not. For example I think it is perfectly moral. Nobody is forcing me to buy eggs. I don't have a right to someone else's eggs. When I don't like the price, I buy a different protein. Over the last several months, I found myself buying a lot more pork, often for less than 90 cents a pound.

didgeoridoo 4y ago

Except basic microeconomics demonstrates that profit is maximized when production is raised to the point where marginal revenue equals marginal cost. Semiconductor fabrication is one thing, because cost of entry is astronomical. But these are chickens we’re talking about. We are probably just seeing the effects of egg producers trying to avoid a bullwhip effect where in two years we are drowning in eggs because the market over-responded. So, they limit investment in production increases today while enjoying the result of an exogenous supply shock on prices. Poof: record profits. What else should we do? Price controls? They provably cause more harm than good. Force companies to invest in egg production? Ridiculous overreach. The market will adapt, people will reduce egg consumption (perhaps durably), and we can play out the counterfactual in 20 years to see if the egg industry shot itself in the foot or not.

stephencanon 4y ago
> Except basic microeconomics demonstrates that profit is maximized when production is raised to the point where marginal revenue equals marginal cost. Basic microeconomics demonstrates that this holds true _in a competitive market_. The record profits tell us that prices have come decoupled from marginal cost, from which we can conclude that major egg producers have been allowed to merge to a point such that the market is no longer competitive.
- mech765 4y ago
  This is the short term during a market disruption where supply is constrained due to an avian flu outbreak. Long term prices will fall back to normal. The difference between the cheap eggs of 2 years ago and the expensive eggs of today is not that too many egg companies merged. Blaming all high prices on anticompetitive behavior is throwing the baby out with the bathwater.
- didgeoridoo 4y ago
  > in a competitive market Yes, hence my point about semiconductor fabs vs. hen cloacas. You can’t just point to a single product type undergoing a price shock and declare the market has failed. Preferences are sticky, but substitutes abound. People will adjust their preferences, and egg consumption will drop. If prices stay high, other products will begin to take the place of eggs in various contexts. We aren’t entitled to cheap eggs, but neither are the producers guaranteed record profits beyond a quarter or two. This too shall pass.
  - stephencanon 4y ago
    Preference for eggs is remarkably sticky; there effectively is no substitute good for most uses.
locococo 4y ago
Only considering market forces and saying the market will fix itself is a shortsighted argument. We live in a society and the market does not factor in societal impacts in terms of the "greatest good". Markets need a balancing counter force to make sure eggs are not only available to the rich and the poor are exposed to malnutrition. I say this because in the US we have this dominant idea that there is nothing better than not interfering with the market while forgetting that the market is only valuable to society if it serves our greater good. The statement that price controls do more harm than good is not true in a general sense. When society chips in to save banks no one seems to have a problem with that, try to make eggs affordable is blatant overreach.

SilverBirch 4y ago

It's really not productive to try and trace this back to an obligation to maximize profits. Firstly, it's not true according to the Supreme Court. And secondly, even we accept that it's something corporations should do or are doing, there are a million ways to judge what would be the maximally profitable strategy. You could say that they should jack up prices to maximize profits, but that's just one strategy for maximizing profits. They could lower prices in order to gain customer loyalty for example instead. In this case, the limited competition isn't due to market consolidation, it's due to a disease wiping out a load of the supply.