3 ms·

Define "could get away with it". What normally prevents this is competition, not regulation. Normally, if someone raises prices of something like eggs "too fa

Define "could get away with it". What normally prevents this is competition, not regulation. Normally, if someone raises prices of something like eggs "too far", then people buy their competitor's eggs. So "could get away with it" means that competition no longer prevented them from raising prices. So that brings you right back to the supplier thing, or something very much like it.

s1artibartfast 3y ago
Or consumer demand was a lot less price sensitive than it was in the past. I have enough money that when the price of eggs goes up, I grumble and buy them anyways. I dont skip the eggs and go buy dried beans.
- AnimalMuppet 3y ago
  Plausible. For that to be the case, though, either consumer psychology changed, or consumers have more money than they did. I could buy Covid changing psychology ("I've been holed up for two years; I'm going to go have some fun!"), but if so, that should be a temporary effect. Or, consumers have more money. That could come from dumping a bunch of money into the economy. (In fact, that was a goal of dumping money into the economy.)
  - didibus 3y ago
    > but if so, that should be a temporary effect Isn't that what we are seeing, that prices are starting to come down?
    - astrange 3y ago
      Prices coming down actually isn't the opposite of inflation - the ideal is that they stop changing, which is "disinflation". Prices going down in a single sector is okay, especially a volatile market that's kind of used to it, but when it happens everywhere that's "deflation" and means you're in the middle of a serious economic crisis like 2008.
      - didibus 3y ago
        It's more nuanced given the greedflation theory I believe. Traditionally, inflation is attributed to: increased production costs (like raw materials, labor, etc.), increased demand, and monetary factors. Greedflation instead says some of it is also attributed to: firms with significant market power increasing prices more than would be necessary to cover their increased costs. This kind of price increase is not driven by the usual market dynamics of supply and demand but rather by the strategic pricing decisions of dominant firms in less competitive markets. That means, as competition ramps up, or buyers start holding back expenses, prices will come down again, to what should have been the "real inflation" all along.
        astrange 3y ago
        The issue with deflation is expectations. If there's expected inflation or deflation it's not too bad; purchases get pulled forward or delayed but people can still make plans for it. Unexpected inflation makes people unhappy because they have to increase spending on essentials, but they usually survive, and it's good for debtors because they get nominal wage increases which make nominal debts easier to pay off. But the opposite happens with unexpected deflation - it gets harder to pay off loans, which is bad if your business has loans and can kill it. So if a company got a profit hike, reinvested all of it, then had a deflation shock, they might go bankrupt. This is okay if it only happens to a few companies, but greedflation relies on some companies being extra important to customers, so that seems extra disruptive if they fail.
        didibus 3y ago
        So if a company got a profit hike, reinvested all of it, then had a deflation shock, they might go bankrupt If they reinvested all of it, it wouldn't have counted as profit. The study points out at outsized increased profit.
        astrange 3y ago
        That just means the issue moves to the shareholders.
  - s1artibartfast 3y ago
    Or consumers saving less is an option too. For example if they thought Big Ticket items like housing were increasingly Out Of Reach, they might be inclined to simply spend more of their money instead of putting it in savings
astrange 3y ago
Well, it's not necessarily that people buy the eggs. I think in reality grocery stores act as a monopsonistic purchasing agent and handle suppliers for the people. That's that Walmart low price guarantee. I do remember my local store sold out of regular eggs (since the alternative to a price hike is a shortage) and I had to buy a pack of extra fancy ones that were all different colors and tasted unusually rich because they were fed on caviar or something. I tried to make that purchase last longer on principle.

s1artibartfast 3y ago

Or consumer demand was a lot less price sensitive than it was in the past. I have enough money that when the price of eggs goes up, I grumble and buy them anyways. I dont skip the eggs and go buy dried beans.

AnimalMuppet 3y ago
Plausible. For that to be the case, though, either consumer psychology changed, or consumers have more money than they did. I could buy Covid changing psychology ("I've been holed up for two years; I'm going to go have some fun!"), but if so, that should be a temporary effect. Or, consumers have more money. That could come from dumping a bunch of money into the economy. (In fact, that was a goal of dumping money into the economy.)
- didibus 3y ago
  > but if so, that should be a temporary effect Isn't that what we are seeing, that prices are starting to come down?
  - astrange 3y ago
    Prices coming down actually isn't the opposite of inflation - the ideal is that they stop changing, which is "disinflation". Prices going down in a single sector is okay, especially a volatile market that's kind of used to it, but when it happens everywhere that's "deflation" and means you're in the middle of a serious economic crisis like 2008.
    - didibus 3y ago
      It's more nuanced given the greedflation theory I believe. Traditionally, inflation is attributed to: increased production costs (like raw materials, labor, etc.), increased demand, and monetary factors. Greedflation instead says some of it is also attributed to: firms with significant market power increasing prices more than would be necessary to cover their increased costs. This kind of price increase is not driven by the usual market dynamics of supply and demand but rather by the strategic pricing decisions of dominant firms in less competitive markets. That means, as competition ramps up, or buyers start holding back expenses, prices will come down again, to what should have been the "real inflation" all along.
      - astrange 3y ago
        The issue with deflation is expectations. If there's expected inflation or deflation it's not too bad; purchases get pulled forward or delayed but people can still make plans for it. Unexpected inflation makes people unhappy because they have to increase spending on essentials, but they usually survive, and it's good for debtors because they get nominal wage increases which make nominal debts easier to pay off. But the opposite happens with unexpected deflation - it gets harder to pay off loans, which is bad if your business has loans and can kill it. So if a company got a profit hike, reinvested all of it, then had a deflation shock, they might go bankrupt. This is okay if it only happens to a few companies, but greedflation relies on some companies being extra important to customers, so that seems extra disruptive if they fail.
        didibus 3y ago
        So if a company got a profit hike, reinvested all of it, then had a deflation shock, they might go bankrupt If they reinvested all of it, it wouldn't have counted as profit. The study points out at outsized increased profit.
        astrange 3y ago
        That just means the issue moves to the shareholders.
- s1artibartfast 3y ago
  Or consumers saving less is an option too. For example if they thought Big Ticket items like housing were increasingly Out Of Reach, they might be inclined to simply spend more of their money instead of putting it in savings

astrange 3y ago

Well, it's not necessarily that people buy the eggs. I think in reality grocery stores act as a monopsonistic purchasing agent and handle suppliers for the people. That's that Walmart low price guarantee. I do remember my local store sold out of regular eggs (since the alternative to a price hike is a shortage) and I had to buy a pack of extra fancy ones that were all different colors and tasted unusually rich because they were fed on caviar or something. I tried to make that purchase last longer on principle.