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> but prices being a function of supply and demand is always the case regardless of how many buyers and sellers there are. Well technically.. but if we're talk

by qwytw 3y ago

> but prices being a function of supply and demand is always the case regardless of how many buyers and sellers there are. Well technically.. but if we're talking about certain inelastic markets a minimal adjustment in supply can result in a significant increase in price (well it's the other way around to be fair). Monopolies and oligopolies do and did exist. If the government can increase supply by finding ways to increase competition that's great. If that fails price controls are a less optimal solution, sure. But they can still work perfectly fine in some cases (as long as the producer is allowed to keep some surplus there is not financial reason to reduce supply). In non-temporary cases were it would be justifiable in my opinion: "sustainable businesses get driven out of business, misallocation of resources due to erroneous price signals hampering future investment in that field, etc." are not actual issues because none of that is happening anyway, the producer has no incentives to invest anything into future improvements all the funds get absorbed by it's shareholds or the administrative apparatus. Or in some other cases it might make more sense for the government to do all that itself through targeted subsidies or concessions (.e.g. should consumers be charged fair market prices for public transport?)

lotsofpulp 3y ago
> are not actual issues because none of that is happening anyway, the producer has no incentives to invest anything into future improvements all the funds get absorbed by it's shareholds or the administrative apparatus. I disagree, there is huge misallocation of resources. For example, medicine, housing, transportation, etc. And as you mention, the problem is monopoly and oligopoly, which is insufficient supply of sellers. So society can choose to fund taxpayer funded R&D for medicine that is in the public domain, or technology, or use land value taxes to disincentivize large landlords, or landlords at all. The point of my original claim though is that price should only be used as a signal of which way society needs supply and demand to go. Another way of saying which way society needs goods and resources to be allocated. Directly controlling price will always lead to corruption and inefficiencies.
- qwytw 3y ago
  > Directly controlling price will always lead to corruption and inefficiencies. So does allowing monopolies or oligopolies to abuse their position. I mean obviously price controls are not the perfect solution and should only be the last resort but I don't see how forcing a monopoly to share some it's surplus with consumers could have a negative outcome if the price cap is set at such a level that it would not affect actual supply. > And as you mention, the problem is monopoly and oligopoly, which is insufficient supply of sellers. In certain markets that's unavoidable. Should we have multiple competing power grids, train/metro tracks, water supply or sewage networks etc? Probably not since that would be very inefficient. In these situations the only reasonable option is price controls (without or without subsides) and I can't think of any other solution.
  - lotsofpulp 3y ago
    Yes, infrastructure where only one provider exists means society should just run it themselves like a utility. We already do this in many or most places. The military, electricity, gas, water, roads, public transit are all “sold” (or operated at cost) by the government.
  - AnthonyMouse 3y ago
    > In these situations the only reasonable option is price controls (without or without subsides) and I can't think of any other solution. You still don't need price controls. Suppose you have a subway system. The monopoly isn't on the cars; you could have multiple operators using the same tracks. The monopoly is on the tracks. Alright, so the tracks can be publicly owned. They don't have to be publicly operated. They can work like this. Construction and maintaining the tracks is put out to competitive bidding. Competing train operators then bid for timeslots to use the tracks. If a line doesn't receive enough bids to pay for its maintenance, it gets shut down. If operators place bids for operating a new line (with e.g. a 10-year contract) that exceed the lowest bid received to construct it, it gets built. The government isn't actually operating anything or setting any prices. All they do is retain ownership of the tracks and put out the provision of services to competitive bidding, so you don't need any price controls.

by qwytw 3y ago

lotsofpulp 3y ago

> are not actual issues because none of that is happening anyway, the producer has no incentives to invest anything into future improvements all the funds get absorbed by it's shareholds or the administrative apparatus. I disagree, there is huge misallocation of resources. For example, medicine, housing, transportation, etc. And as you mention, the problem is monopoly and oligopoly, which is insufficient supply of sellers. So society can choose to fund taxpayer funded R&D for medicine that is in the public domain, or technology, or use land value taxes to disincentivize large landlords, or landlords at all. The point of my original claim though is that price should only be used as a signal of which way society needs supply and demand to go. Another way of saying which way society needs goods and resources to be allocated. Directly controlling price will always lead to corruption and inefficiencies.

qwytw 3y ago
> Directly controlling price will always lead to corruption and inefficiencies. So does allowing monopolies or oligopolies to abuse their position. I mean obviously price controls are not the perfect solution and should only be the last resort but I don't see how forcing a monopoly to share some it's surplus with consumers could have a negative outcome if the price cap is set at such a level that it would not affect actual supply. > And as you mention, the problem is monopoly and oligopoly, which is insufficient supply of sellers. In certain markets that's unavoidable. Should we have multiple competing power grids, train/metro tracks, water supply or sewage networks etc? Probably not since that would be very inefficient. In these situations the only reasonable option is price controls (without or without subsides) and I can't think of any other solution.
- lotsofpulp 3y ago
  Yes, infrastructure where only one provider exists means society should just run it themselves like a utility. We already do this in many or most places. The military, electricity, gas, water, roads, public transit are all “sold” (or operated at cost) by the government.
- AnthonyMouse 3y ago
  > In these situations the only reasonable option is price controls (without or without subsides) and I can't think of any other solution. You still don't need price controls. Suppose you have a subway system. The monopoly isn't on the cars; you could have multiple operators using the same tracks. The monopoly is on the tracks. Alright, so the tracks can be publicly owned. They don't have to be publicly operated. They can work like this. Construction and maintaining the tracks is put out to competitive bidding. Competing train operators then bid for timeslots to use the tracks. If a line doesn't receive enough bids to pay for its maintenance, it gets shut down. If operators place bids for operating a new line (with e.g. a 10-year contract) that exceed the lowest bid received to construct it, it gets built. The government isn't actually operating anything or setting any prices. All they do is retain ownership of the tracks and put out the provision of services to competitive bidding, so you don't need any price controls.