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I’m not convinced this would drive up prices. In the way you’re painting, yes, if you implemented this suddenly and the large companies were suddenly left holdi
by milesvp 3y ago
I’m not convinced this would drive up prices. In the way you’re painting, yes, if you implemented this suddenly and the large companies were suddenly left holding a big tax burden they’re going to have a new profit maximizing price point for their goods, which will be higher. But I guess the question is then, how much do companies actually get to set prices? I’ve seen distortions in my local rental market due to the consolidation of management companies and the use of software to both raise prices and increase vacancies to keep prices high. They have essentially taken a consumer surplus and turned it into a corporate surplus. You will see this kind of behavior anywhere monopsonies are allowed to form. So assuming that a big behemoth company is just naturally going to find a profit maximizing price for goods that is lower than prices when there is significantly more competition is not a given. Generally the main goal of a monopolist is to drive competition out of business, then raise prices significantly. Just because this is really hard to do, doesn’t change the basic strategy.
- s1artibartfast 3y agoI may not have been clear. I thought the proposal was specifically to apply taxes to drive up prices from the monopoly. Otherwise, I dont understand how it helps the competition at all. If monopoly co. can make widgets for $0.80 and sell them for $1.00, but competition can only hope to make them for $1.10, then you would need to tax the monopoly $0.30, for the the competition to even have a shot. this is all in the context of small companies that cant compete against monopolies due to economies of scale. Of course, the story is different if the small company can compete on manufacturing cost, but are prevented from doing so due to lawyers, legislation, and lucrative buyouts.