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>, a gas station isn't going to look at a competitor selling gas at $4.15 and decide to raise their price to $4.45. They would lower their price to match the co

• bogwog 2y ago
  > Competitors can converge on a higher price instead of a lower price. It's not just one direction. They just need to do it via public price signaling to stay out of legal trouble. I don't understand what you're saying. Are you saying that companies are colluding, but not really because the prices are public? Most prices are public, just walk into any supermarket or open Amazon.com and you'll see public prices. If a company bases their price on a competitor's price, that's not collusion, that's just a pricing strategy. If a company is able to price a product above their competitors and still succeed (e.g. by investing more in marketing), that's legal too. > In 2022, Apple Music raised their subscription from $9.99 to $10.99. Spotify then followed them and also raised their price to $10.99. By 2023, they both converged on $10.99. I think right now in 2024, Spotify is $1 higher at $11.99. Nobody should be surprised if Apple Music also raises its to $11.99. Streaming is not an example of a healthy market IMO. I don't know the economics of it all, but I know all the streaming services need to pay the same record labels. Whatever is going on there, it's weird that they all cost the same. I currently pay $10.99/month for Tidal, which is the same exact price as most other services. I wouldn't be surprised if there was collusion going on there, maybe even something like RealPage behind the scenes. There's also the factor of Apple and Google's monopolies over apps, and I wonder if undercutting Apple/Youtube is bad for business. > But the airlines are also doing the opposite of your scenario: they also raise prices instead of lower them via legal "price signaling" via publicized fares[1] in the global reservations system. The link you posted seems to be a google search page? Not sure what you meant by that.
  • ang_cire 2y ago
    > If a company is able to price a product above their competitors and still succeed (e.g. by investing more in marketing), that's legal too. Yes, but it also runs counter to the idea that free markets tend to drive prices down through competition. In reality, 1 of 2 things happens: a) companies try to differentiate their products enough to not be direct competitors (e.g. exclusive content on streaming platforms, or platform lock-in), and both/all charge more b) one company buys the other to kill their competition No one actually lowers their prices to compete anymore, because we abandoned enforcing anti-trust and anti-monopoly laws decades ago.
    • bogwog 2y ago
      Sorry, but that is nonsense and I have no idea what point you're trying to make. You're saying that competition doesn't drive down prices by giving two examples of how companies avoid competition.
      • ToucanLoucan 2y ago
        > You're saying that competition doesn't drive down prices by giving two examples of how companies avoid competition. The point is that the intuitive wisdom that free market competition lowers prices of goods is not now, nor has it ever been the truism that it's postured as, because the businesses within that market have a huge selection of tools and strategies at their disposal to avoid direct competition. And this makes sense. Why in the world would you subject your business to the unmediated competition of a free market? Yeah, it's totally possible for you to create a product so innately better that you own the market by virtue of that, but that's like... hard. It's way easier to create brand-lock-in to incentivize your existing customers to stay in your "ecosystem," or to create an innovative unique feature and patent it so your competition can't use it, or use snobby/elitist marketing to make your product more enticing to people who seek status, or shit, go the other way, make it humble and down to earth, and appeal to a sense of "genuineness," or tie yourself to patriotism and put flags all over your product, whatever it might be. There's tons of ways you can make people want your thing that have fuck-all to do with the thing. I think this is a serious fault in how pro-free-market people tend to think, which is this constant positioning of people as rational actors who will choose the best product for their needs, and it's utter nonsense. People buy stuff for stupid reasons constantly.
• Animats 2y ago
  This is oligopoly. If there are less than four major players, price competition seems to stop. There's a EU study on this, which I've referenced before. More than four, and someone will drop their price to $8.99, grow their market share, and make more money. When the number of competitors is very small, and you already have major market share, it's very hard to grow market share by lowering prices. So price competition stops. It doesn't take collusion. It's a result of size alone.