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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, o

by 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.

by rocqua 3y ago

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.