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Why would that happen, if it didn’t happen before the tarrifs?
by simonh 1y ago
Why would that happen, if it didn’t happen before the tarrifs?
- tantalor 1y agoBecause companies make more profits when the prices are higher. Under normal conditions, if one company increases their price then buyers will find an alternative. When all the companies increase the price at the same time then there are no alternatives. Customers become acclimated to the new price.
- sodality2 1y agoBut there then becomes an incentive to lower prices to capture more demand. I don’t think that tariffs will incentivize collusion any more often.
- tantalor 1y agoThat's very risky for companies to do because because you might not capture that demand. If you fail then you just lost money. One reason is buyers may only consider alternatives when prices increase.
- toasterlovin 1y agoIf you’re lowering prices because your costs went down, then you haven’t lost money.
- sodality2 1y agoThat's how market forces work, it's risky but it pays off until prices hit equilibrium.
- EasyMark 1y agoDepends on the market. Markets with lots of competition will have to lower prices. With only 1 or 2 major players? They'll keep prices high based on backroom handshake deals or "i'm not moving till he moves"