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Actually, this kind of law does not make any sense. In the case of carrefour, since they are charging such high prices nowadays, what prevents a bunch of farmer
by batista 15y ago
Actually, this kind of law does not make any sense. In the case of carrefour, since they are charging such high prices nowadays, what prevents a bunch of farmers to associate themselves and open their own mall to sell cheaper and regain market share? Nothing, absolutely nothing. They just can't be bothered.
Nothing? Never had any experience in retail business ownership, right?
For starters, because Carrefour has a HUGE cross country AND multi-national supply chain. Because of it's mass wholesale ordering it can assure killer prices and it also has money-to-burn in the bank. So, if they threaten it, it can lower it's prices for a while to compete, until it destroys them. They cannot afford do the same.
Second, Carrefour has the scale, which means it also has: thousands of other goods, exclusive deals, loss leaders, etc. Even if Carrefour couldn't compete on price (which it can, 200%), but had somewhat similar prices, it wouldn't make much sense for the buyer to spend gas plus time to go to two places just to buy some stuff cheaper in one, if he can get everything he wants in Carrefour.
Third, Carrefour with its size, get the lion's share of advertising. Which DOES matter.
Lastly, it's the bloody cost. It's another thing to open a retail outlet in a competitive environment, and totally another to open one where a few big mega-malls have saturated the market and killed everybody else. Uncertainty, and the ample opportunities for the big guy to crash you at will makes the move all too risk.
That's it, in a nutshell. Why you'd believe that the problem is that they haven't thought of it, or that they aren't "entrepreneurial" enough?
(Btw, such moves are even attempted in a lot of places with similar conditions. Very rarely they end well).
- cousin_it 15y ago> So, if they threaten it, it can lower it's prices for a while to compete, until it destroys them. Thanks, this argument for antitrust laws is new to me. Is this a standard argument in economics, and do proponents of the free market have some standard answer to it?
- eli 15y agohttp://en.wikipedia.org/wiki/Predatory_pricing http://en.wikipedia.org/wiki/Predatory_pricing in particular the Criticism section
- recoil 15y agoFourth, the government happily interferes in the market on behalf of its buddies at Carrefour by implementing planning regulations that would make it near impossible to open a competing mall.
- batista 15y agoThat also. In France in particular they have regulated the production of cheese to kill traditional small scale producers (and, arguably, real bloody cheeses!).