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No, your time horizon is too short. Prices go up in the short term, which increases profits, which incentivizes competition, which brings prices down in the lon
by colonCapitalDee 2y ago
No, your time horizon is too short. Prices go up in the short term, which increases profits, which incentivizes competition, which brings prices down in the long term. A few years of increased prices is worth increased efficiency over decades. Prices are going in most industries, US markets are generally quite competitive.
- Miraste 2y agoIncreasing profits often doesn't incentivize competition, especially when barriers to entry are high. Instead, it decreases competition by giving existing corporations even more money and power to use against newcomers. Look at what happened to Bandcamp: bought up by a music licensing company and gutted.
- ClumsyPilot 2y ago> which increases profits, which incentivizes competition This is a fantasy. Give two examples of major markets where competition has increased recently. The US economy has grown what, 4 times since 1990’s but the number of registered companies has fallen by half.
- AgentOrange1234 2y agoDoes the sheer number of companies correlate with competition? I can imagine simple hypotheticals like: A. Two companies that compete with one another in each of markets 1, 2, and 3. B. Three companies, each with a monopoly on a single market. I know nothing.
- ang_cire 2y agoIncreasing profits just enables attacking competitors in other ways than via product competition. The narrative that profits get turned into RnD instead of executive bonuses and stock buybacks or acquisitions is a Econ 101 fantasy. In the real world, Cisco, Meta, Amazon, and Microsoft don't make better products to win, they just buy Splunk, Insta, Whole Foods, and Bethesda.
- ang_cire 2y agoI would also like to point out that the "long term" is just a collection of several "short terms", so if the short terms are only price increases (which they are), then the long term will also just be that.