3 ms·

I feel like some of my groceries are decently competitive markets. But brand momentum and just information insensitivity keeps me (and others) from buying a dif

by rocqua 3y ago

I feel like some of my groceries are decently competitive markets. But brand momentum and just information insensitivity keeps me (and others) from buying a different product just because their price went up less. And if the price increase is inevitable, then by delaying your price increase compared to competitors only gives you a limited window for gaining customers based on the better price. In such a world, if your competitors are doing greed-flation, it might prove that you are leaving money on the table unless you also join. Sadly this logic effectively yields collective action between competitors without any illegal agreements.

hayst4ck 3y ago
Where does intervention come from? Theoretically the government regulates commons and so the government should intervene and regulate commons when the public good requires it. Why can't the government intervene? Because these companies have gotten so large they have literally hundreds of millions of dollars to spend preventing intervention.
- rocqua 3y ago
  It is very hard to 'prove' this greed-flation. The coordination happens only through the market in this theory, so there is no damming communication evidence, or even testimony that can prove this is what happened. Perhaps something to make customers more price-sensitive by making price comparison easier or by forcing more disclosure around when price-increases happen. The best solution is to stop high inflation. That lengthens the window you can keep prices lower than your competitors, to take market share. But inflation is very difficult to affect.
  - hayst4ck 3y ago
    https://www.npr.org/transcripts/1088346603 https://www.npr.org/transcripts/1088346603 NPR seems to agree with both of us. > SCOTT MORTON (Yale economist who focuses on anti trust): In a concentrated market, one firm could announce it's going to raise prices because of inflation. And its rivals might look at that and say, oh, this is a good excuse to raise prices. They're raising prices, so we should match. And we should announce we're raising prices also. We call this tacit collusion. And in a setting like this one, where inflation might be giving firms permission to raise prices and then they follow each other, that could cause price increases. > WOODS (host): So bottom line - companies raise prices when they can. That's what companies have always done. And what keeps them from doing it is usually competition. But even when we have uncompetitive markets like in the meat industry where prices are high, that is not the big driver of inflation in the economy right now. But that does not mean that it is a good thing to let monopolies keep their monopoly power. Fiona says it is good public policy to crack down. That means scrutinizing mergers, investigating possible collusion and splitting companies if needed. > SCOTT MORTON: Is it a good idea to do? Absolutely. Because it brings down prices in general because markups are lower when there's more competition. It raises quality. It raises innovation. It increases productivity. It increases the efficiency of the economy. So there's many, many ways in which antitrust enforcement and competitive markets benefit consumers. More vigorous antitrust enforcement is a long-run project. It's not going to change prices in 2022. My understanding in reading the article is that the economist was making a distinction that doesn't make sense to me, which is that the cause is distinct from what enables it. It seems that what was said is that supply chain shocks and tacit collusion are the cause, but they are enabled and amplified by lack of competition.
newsclues 3y ago
"I feel like some of my groceries are decently competitive markets." I think the few number of grocery, food and consumer packaged goods companies, artificially create the feeling or appearance of competitive markets with many brands.
- treis 3y ago
  No, there just are lots of grocery chains. I can think of Publix, Kroger, Trader Joes, Whole Foods, Target, Walmart, Lidl, and Aldi all within driving distance of my house.
  - bombcar 3y ago
    Compare the cross-section of identical brands and products available at all.
    - treis 3y ago
      Every store has their branded option and in some cases like TJs it's almost all their stuff. So even if there's only 2 name brands there's lots of options. And companies don't compete solely against existing companies. They compete against the possibility of new entrants. So a duopoly can't price much higher than the cost of a couple of their customers getting together to launch a competitor. Anecdatally what I've noticed is that branded food has increased much faster than bulk or generic items. But that's not really a bad thing. That's market dynamics rewarding a company for being good at what they do.
      - bombcar 3y ago
        Competitors can come from unexpected angles, too. Around here some of the nicer convenience stores win on butter, milk, bread, or bananas.

by rocqua 3y ago

hayst4ck 3y ago

Where does intervention come from? Theoretically the government regulates commons and so the government should intervene and regulate commons when the public good requires it. Why can't the government intervene? Because these companies have gotten so large they have literally hundreds of millions of dollars to spend preventing intervention.

rocqua 3y ago
It is very hard to 'prove' this greed-flation. The coordination happens only through the market in this theory, so there is no damming communication evidence, or even testimony that can prove this is what happened. Perhaps something to make customers more price-sensitive by making price comparison easier or by forcing more disclosure around when price-increases happen. The best solution is to stop high inflation. That lengthens the window you can keep prices lower than your competitors, to take market share. But inflation is very difficult to affect.
- hayst4ck 3y ago
  https://www.npr.org/transcripts/1088346603 https://www.npr.org/transcripts/1088346603 NPR seems to agree with both of us. > SCOTT MORTON (Yale economist who focuses on anti trust): In a concentrated market, one firm could announce it's going to raise prices because of inflation. And its rivals might look at that and say, oh, this is a good excuse to raise prices. They're raising prices, so we should match. And we should announce we're raising prices also. We call this tacit collusion. And in a setting like this one, where inflation might be giving firms permission to raise prices and then they follow each other, that could cause price increases. > WOODS (host): So bottom line - companies raise prices when they can. That's what companies have always done. And what keeps them from doing it is usually competition. But even when we have uncompetitive markets like in the meat industry where prices are high, that is not the big driver of inflation in the economy right now. But that does not mean that it is a good thing to let monopolies keep their monopoly power. Fiona says it is good public policy to crack down. That means scrutinizing mergers, investigating possible collusion and splitting companies if needed. > SCOTT MORTON: Is it a good idea to do? Absolutely. Because it brings down prices in general because markups are lower when there's more competition. It raises quality. It raises innovation. It increases productivity. It increases the efficiency of the economy. So there's many, many ways in which antitrust enforcement and competitive markets benefit consumers. More vigorous antitrust enforcement is a long-run project. It's not going to change prices in 2022. My understanding in reading the article is that the economist was making a distinction that doesn't make sense to me, which is that the cause is distinct from what enables it. It seems that what was said is that supply chain shocks and tacit collusion are the cause, but they are enabled and amplified by lack of competition.

newsclues 3y ago

"I feel like some of my groceries are decently competitive markets." I think the few number of grocery, food and consumer packaged goods companies, artificially create the feeling or appearance of competitive markets with many brands.

treis 3y ago
No, there just are lots of grocery chains. I can think of Publix, Kroger, Trader Joes, Whole Foods, Target, Walmart, Lidl, and Aldi all within driving distance of my house.
- bombcar 3y ago
  Compare the cross-section of identical brands and products available at all.
  - treis 3y ago
    Every store has their branded option and in some cases like TJs it's almost all their stuff. So even if there's only 2 name brands there's lots of options. And companies don't compete solely against existing companies. They compete against the possibility of new entrants. So a duopoly can't price much higher than the cost of a couple of their customers getting together to launch a competitor. Anecdatally what I've noticed is that branded food has increased much faster than bulk or generic items. But that's not really a bad thing. That's market dynamics rewarding a company for being good at what they do.
    - bombcar 3y ago
      Competitors can come from unexpected angles, too. Around here some of the nicer convenience stores win on butter, milk, bread, or bananas.