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If one company unilaterally increase their prices in a stable environment they will probably lose market share to their competitors. I guess that when prices a
by MattPalmer1086 3y ago
If one company unilaterally increase their prices in a stable environment they will probably lose market share to their competitors.
I guess that when prices are rising sharply anyway, it's easier to raise them and it won't be noticed so much. And their competitors probably make the same calculation.
At least, that's what I understand by it.
- Gibbon1 3y agoIn a lot of industries you have a company that's a price leader. If they raise prices their competitors will also raise prices to increase profits instead of trying to take away market share from the price leader. They'll do that because it's trivial to do vs the risk and logistical hassle of trying to increase production. Remember the price leader can instantly drop prices again which could put you underwater.