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Why were they able to get away with it? Market forces should prevent this.
by bediger4000 3y ago
Why were they able to get away with it? Market forces should prevent this.
- FirmwareBurner 3y agoWhich market forces in a monopoly>
- neodymiumphish 3y agoWhere's there a monopoly?
- a_gnostic 3y agoJust off the top of my mind: IP, entry, justice, and enforcement of these. Non exhaustive, tbs.
- neodymiumphish 3y agoWho specifically has a market on which industry?
- a_gnostic 3y agoThe things I listed are enforced by government, resulting in monopolies.
- neodymiumphish 3y agoAh, gotcha. I was responding to a comment which suggested that there was a lack of market forces due to the existence of monopolies, which makes very little sense in the context of the OP.
- quantified 3y agoExcept for oligopolies. Competitors match each others' price rises too sometimes. Why compete too hard when everyone can make more profit?
- contravariant 3y agoMarket forces only provably work in a steady state. Unsurprisingly they're not that good at dealing with sudden swings.
- recursivedoubts 3y agoMaybe you were lied to about how "market forces" work?
- SSchick 3y agoI think they were being sarcastic.
- recursivedoubts 3y agoa possibility, but we can't be too safe!
- HighFreqAsuka 3y agoThere's a theory, price-over-volume, that the sudden shift in demand and expectation of inflation gave companies room to explore a different point on the revenue curve, where they increase the price and simply sell less volume. Prior to the pandemic this was risky and people assumed they were near optimal already. During the pandemic a bunch of companies learned they could push on price, sell less, but still make more revenue. All companies did this independently and simultaneously so the usual competitive effects didn't kick in. And now we're at a new equilibrium that the few companies in each industry are happy with.
- listenallyall 3y agoPlenty of industries raised prices with very little effect on volume, however, it was not truly "independent", companies can easily coordinate by sending signals via forecasts, press releases, news leaks, etc. If P&G and Unilever both decide to raise the price of soap and toothpaste, are you going to shower or brush less? Meanwhile demand exploded on discretionary spending like travel, restaurants and recreation despite price increases.
- HighFreqAsuka 3y ago> however, it was not truly "independent", Of course I don't mean to imply they operate in a vacuum. They can obviously see competitors raising their prices. I just mean to say they don't get into a room and actively decide on a price.
- azinman2 3y agoExcept price fixing does occur. I’m not saying everything is the result of it, but they absolutely do.
- bugglebeetle 3y ago“Market forces” create monopolies that buy off politicians and entrench their price-fixing power.
- astrange 3y agoWithout looking it up, do you know what a monopsony is? If so, why are you claiming any given middleman business is only one of them and not the other? Since they have opposite effects. I also don't think the monopoly model applies outside industries like energy where there's obvious physical reasons to have one, but there are reasons it helps to grant one to a business in exchange for heavier oversight. It's hard to regulate a lot of small companies. In general though, "big monopoly corporations" causing everything is a leftover of 70s New Leftism, which was a failure and worse than their prior Marxist analysis.
- devindotcom 3y agoI can't tell if this is a joke!
- DannyBee 3y agoBecause free markets are not in fact efficient, despite economists really wanting them to be, and there is zero form of rigorous proof that they are.
- deleted 3y ago[deleted]
- rrrrrrrrrrrryan 3y agoNot sure if you're being sarcastic, but in case you weren't: Normally when a business raises costs, regular customers react by blaming the business and taking their business elsewhere. But when all your customers are reading headlines about inflation, you kind of get a free pass to raise prices on your customers, and direct their ire toward the ambiguous specter of "inflation", regardless of whether or not you actually need to raise prices. When your competitor across the street sees you do this, and sees your customers still patronizing your business, and your profits skyrocketing, they do the same. Some portion of inflation was real, but a nontrivial part was simple herd mentality by the businesses and using pricing psychology to exploit their customers' irrational decision making.
- beezlebroxxxxxx 3y agoThere's a famous saying in economics about market forces: > In the long run we're all dead.
- jauntywundrkind 3y agoWe need effective anti-trust regulation to keep markets competitive. And that hasn't been the case for decades. A huge % of the goods & services in this world are in the hands of a couple dozen massive conglomerates, after endless consolidation. This particular narrative seems so believable to me, that a couple companies lead the way jacking up prices in a time of crisis while bandying about shitty airless crap about inflation & costs while profits soared. The very big giants doing this set a precedent & narrative, created a vibe that could perpetuate & extend greedflation. The exact same hype & fury lead us to believe retail theft was astronomically worse: again, now that the chips are falling, we see: this was a boldfaced lie.
- didibus 3y agoThe linked study explains this, it's a mix-up of market power, global shake-ups, supply chain issues, and essential needs that affected normal market forces to self-regulate. You've got these big companies that dominate and make it tough for competitors to get a foot in the door. The pandemic threw supply chains into a tailspin, leaving folks with fewer choices and companies with the goods charging top dollar. Post Covid/Ukraine, these same companies found themselves suddenly holding all the cards, letting them hike prices. Everyone kinda expected to shell out more, because of the looming inflation, so companies were able to slide in bigger price tags under the radar. And this was all for stuff people can't live without, like energy, so they payed up even if it hurts. And it's not really clear to average folks what these companies real cost are, so it's easy to believe the price increase are all legitimate and due to some "real increase in cost".
- throwawaymanbot 3y ago[dead]
- friend_and_foe 3y agoMarket forces amount to "the price is what people are willing to pay." You dump a bunch of paychecks in the bank accounts of every american for 2 years, they're willing to pay more. All these arguments about the price going up due to money printing vs due to price gouging are a red herring. Whenever money is printed, capital gets soaked up by someone. When it's given to banks, they employ economists, so they soak up as much as they can. When it's given to regular people they thank their lucky stars that they can now afford what they're about to run to the store to blow it on, the people selling the things they want profit. Debasing the money always hurts the little guy, no matter whether he's the recipient of the newly minted money or not.
- drewcoo 3y agoThank goodness it's only consumers suffering, or market forces might have to bail someone out!
- lamontcg 3y agoDue to aggregate supply constraints due to the pandemic there were not enough aggregate goods. Also the pandemic dramatically constrained spending and increased savings, which then rebounded sharply after it was done, creating a tidal wave of aggregate demand. The result was rising prices. And that is against a background of 10 years of ZIRP and the government threw money at corporations through PPP and blunted the effect of the pandemic recession and we were clearly against the inflection point of the short-term phillips curve. Market forces should entirely predict all of this. (And companies are ALWAYS ALWAYS ALWAYS "greedy", the headline line should probably be something like "Millennials wake up one morning and discover how capitalism has worked all along [SHOCKED]").