5 ms·

If there is no agreement, then the magic term is "tacit collusion." Why not ask the same ridiculous amount of money your competitors do? People seem to be payi

If there is no agreement, then the magic term is "tacit collusion." Why not ask the same ridiculous amount of money your competitors do? People seem to be paying for it. Their fault. If suppliers have sufficiently different products, they can make some more expensive, others cheaper; on average, everybody pays more. A high barrier to entry might help such practices. That doesn't mean I'm saying this is what is happening. Sometimes things just suck, and somebody bought the world's supply of RAM wafers to use as frisbees. https://en.wikipedia.org/wiki/Tacit_collusion https://en.wikipedia.org/wiki/Tacit_collusion

mywittyname 4mo ago
We have to decide what part is damaging to society: the actual physical agreement, or the effects of the agreement? If it's the actual physical agreement that's the problem - the system is working as intended. But if we are looking to prevent the negative outcomes associated with price fixing and collusion, our system is failing us. They are never going to find proof of conspiracy. The people involved covered their tracks, and doing so is trivial. So the best we can do is punish the appearance of collusion. And if the goal is to actually prevent harm to customers, that's a better solution anyway, since it encourages leaders of companies to behave in a manner that's the opposite of collusion.
- Stitch4223 4mo ago
  You'll have to create a case that harm is taking place. Harm does not mean a PlayStation 5 is now $200 more expensive or that inflation exists. I would look at questions regarding what harm is created: Is it discriminatory? Are parts of society shutting down, and is that unreasonable? Are groups of people now unable to afford a living? Does it move the poverty line? Is that permanent? And how do you prove this is exclusively due to the price increase of tech components, and RAM specifically? It needs to be unfuzzy in some way in order to make sense, but that's just my opinion. I do agree prices are insane and wish for them to come down today. I liked the ubiquitous amounts of RAM any system could have. In those days, forums were also filled with how insanely expensive 32 gigabytes of RAM was, about $100 :)
  - AnthonyMouse 4mo ago
    > You'll have to create a case that harm is taking place. Harm does not mean a PlayStation 5 is now $200 more expensive or that inflation exists. "Things cost more because of collusion" is always a harm. It doesn't matter if the product is maize or gold-plated haute couture, competitors are supposed to compete. The question is, what's the best way to tell the difference between tacit collusion and just normal supply and demand? It's not that easy, but here's a decent test: It's tacit conclusion if 1) net margins have been high for e.g. 3 years and 2) no new companies have entered the market in that period of time, or were acquired by an incumbent if they did. Notice that this works for everything. Even if you're making luxury goods, the price may be high, but so are production costs, and there is a lower volume to amortize fixed costs over, so long-term net margins should be the same as they are anywhere else or you should see new entrants. If you don't, it's reasonable to infer collusion and leave it on the companies to prove otherwise.
    - Stitch4223 4mo ago
      I see the logic in your reply, thanks :)
    - gruez 4mo ago
      >1) net margins have been high for e.g. 3 years That breaks down for industries with long investment cycles. It takes years to build a fab, so the fact that DRAM prices have been high for 1-2 years isn't too suspicious, considering they've been burned by boom and bust cycles before. >Notice that this works for everything. Even if you're making luxury goods, the price may be high, but so are production costs, and there is a lower volume to amortize fixed costs over, so long-term net margins should be the same as they are anywhere else or you should see new entrants. If you don't, it's reasonable to infer collusion and leave it on the companies to prove otherwise. I can't tell you don't buy luxury goods ;) People don't pay $10k+ for a Hermes bag because they want something that carries stuff 100% (or even 1%) better than a normal bag. They're buying it for the brand image/history. That's not something that can be replicated by a new entrant with some money to splash out on R&D or even marketing.
      - 4mo ago
- stasomatic 4mo ago
  Not directly addressing your points, but I fail to see how this whole situation can be viewed as cartel price fixing. There is no oversupply. The strange thing is that we are at the mercy of 3 corps.
  - eddythompson80 4mo ago
    > The strange thing is that we are at the mercy of 3 corps. Wait until you discover TSMC, ASML, Carl Zeiss, Intel and AMD, or even Nvidia.
AnthonyMouse 4mo ago
> Why not ask the same ridiculous amount of money your competitors do? People seem to be paying for it. Their fault. That's not how commodity markets work. This stuff is essentially sold at auction with the price set by supply and demand. The way they would fix the price is by constraining supply so that people have to outbid each other on a smaller amount of inventory. But that's not that hard to measure -- are they producing less than they were before prices went up? The answer is actually that they're producing more. The reason prices went up anyway is the huge increase in demand. You would then have to make the case that it's not just that they're reducing supply but that they're not increasing it fast enough. That's theoretically possible but it's also very plausible that building new fabs just takes time, so if someone's theory is that they're colluding then they need to present some evidence.
- thewebguyd 4mo ago
  > but that they're not increasing it fast enough That also isn't illegal. A business can choose to artificially restrict supply if they want, there's no mandate that they must meet demand. It only crosses into illegal territory if multiple companies get together and secretly agree to cap production to keep prices high. Then it becomes collusion. It also becomes illegal if there's a monopoly power that is intentionally constricting supply to specifically stop a smaller competitor or lock them out of the market. The hard part is how do you prove Samsung, SK Hynix, Micron are acting as a unified cartel when there obviously isn't going to be a paper trail for secret meetings.
  - AnthonyMouse 4mo ago
    > A business can choose to artificially restrict supply if they want, there's no mandate that they must meet demand. There is, however, no incentive to do this when prices are high unless you expect competitors to do likewise, since otherwise you're just handing the business to the others when they increase production. Which strongly implies that if that's what everybody is doing, they're colluding. > The hard part is how do you prove Samsung, SK Hynix, Micron are acting as a unified cartel when there obviously isn't going to be a paper trail for secret meetings. Which is the problem when that's what's happening, and why we should maybe change the law to infer the collusion from the outcome in cases where prices are high yet nobody is responding by increasing their market share.
brookst 4mo ago
Yeah your qualifier is important. If I have zyngots and suddenly the price goes through the roof, it is not collusion or illegal for me to raise my prices. Tacit collusion requires at least signaling. There has to be some intent. Like in the US rental market where Realpage coordinates tacit collusion. But if there is legitimately demand for far more memory than can be produced, it seems silly to claim collusion to raise prices.
- omgwtfbyobbq 4mo ago
  Does conscious parallelism require signaling? But yeah, if there's demand a limited supply, price increases from that are legit.
- itopaloglu83 3mo ago
  As George Carlin once said, these people know what’s good for them, they all went to same schools, and hang out at same places, they don’t need to have a secret meeting to collide.
laughing_man 4mo ago
Isn't it difficult to win on tacit collusion if you can't find some kind of document or email to show they were deliberately taking advantage?

mywittyname 4mo ago

We have to decide what part is damaging to society: the actual physical agreement, or the effects of the agreement? If it's the actual physical agreement that's the problem - the system is working as intended. But if we are looking to prevent the negative outcomes associated with price fixing and collusion, our system is failing us. They are never going to find proof of conspiracy. The people involved covered their tracks, and doing so is trivial. So the best we can do is punish the appearance of collusion. And if the goal is to actually prevent harm to customers, that's a better solution anyway, since it encourages leaders of companies to behave in a manner that's the opposite of collusion.

Stitch4223 4mo ago
You'll have to create a case that harm is taking place. Harm does not mean a PlayStation 5 is now $200 more expensive or that inflation exists. I would look at questions regarding what harm is created: Is it discriminatory? Are parts of society shutting down, and is that unreasonable? Are groups of people now unable to afford a living? Does it move the poverty line? Is that permanent? And how do you prove this is exclusively due to the price increase of tech components, and RAM specifically? It needs to be unfuzzy in some way in order to make sense, but that's just my opinion. I do agree prices are insane and wish for them to come down today. I liked the ubiquitous amounts of RAM any system could have. In those days, forums were also filled with how insanely expensive 32 gigabytes of RAM was, about $100 :)
- AnthonyMouse 4mo ago
  > You'll have to create a case that harm is taking place. Harm does not mean a PlayStation 5 is now $200 more expensive or that inflation exists. "Things cost more because of collusion" is always a harm. It doesn't matter if the product is maize or gold-plated haute couture, competitors are supposed to compete. The question is, what's the best way to tell the difference between tacit collusion and just normal supply and demand? It's not that easy, but here's a decent test: It's tacit conclusion if 1) net margins have been high for e.g. 3 years and 2) no new companies have entered the market in that period of time, or were acquired by an incumbent if they did. Notice that this works for everything. Even if you're making luxury goods, the price may be high, but so are production costs, and there is a lower volume to amortize fixed costs over, so long-term net margins should be the same as they are anywhere else or you should see new entrants. If you don't, it's reasonable to infer collusion and leave it on the companies to prove otherwise.
  - Stitch4223 4mo ago
    I see the logic in your reply, thanks :)
  - gruez 4mo ago
    >1) net margins have been high for e.g. 3 years That breaks down for industries with long investment cycles. It takes years to build a fab, so the fact that DRAM prices have been high for 1-2 years isn't too suspicious, considering they've been burned by boom and bust cycles before. >Notice that this works for everything. Even if you're making luxury goods, the price may be high, but so are production costs, and there is a lower volume to amortize fixed costs over, so long-term net margins should be the same as they are anywhere else or you should see new entrants. If you don't, it's reasonable to infer collusion and leave it on the companies to prove otherwise. I can't tell you don't buy luxury goods ;) People don't pay $10k+ for a Hermes bag because they want something that carries stuff 100% (or even 1%) better than a normal bag. They're buying it for the brand image/history. That's not something that can be replicated by a new entrant with some money to splash out on R&D or even marketing.
    - 4mo ago
stasomatic 4mo ago
Not directly addressing your points, but I fail to see how this whole situation can be viewed as cartel price fixing. There is no oversupply. The strange thing is that we are at the mercy of 3 corps.
- eddythompson80 4mo ago
  > The strange thing is that we are at the mercy of 3 corps. Wait until you discover TSMC, ASML, Carl Zeiss, Intel and AMD, or even Nvidia.

AnthonyMouse 4mo ago

> Why not ask the same ridiculous amount of money your competitors do? People seem to be paying for it. Their fault. That's not how commodity markets work. This stuff is essentially sold at auction with the price set by supply and demand. The way they would fix the price is by constraining supply so that people have to outbid each other on a smaller amount of inventory. But that's not that hard to measure -- are they producing less than they were before prices went up? The answer is actually that they're producing more. The reason prices went up anyway is the huge increase in demand. You would then have to make the case that it's not just that they're reducing supply but that they're not increasing it fast enough. That's theoretically possible but it's also very plausible that building new fabs just takes time, so if someone's theory is that they're colluding then they need to present some evidence.

thewebguyd 4mo ago
> but that they're not increasing it fast enough That also isn't illegal. A business can choose to artificially restrict supply if they want, there's no mandate that they must meet demand. It only crosses into illegal territory if multiple companies get together and secretly agree to cap production to keep prices high. Then it becomes collusion. It also becomes illegal if there's a monopoly power that is intentionally constricting supply to specifically stop a smaller competitor or lock them out of the market. The hard part is how do you prove Samsung, SK Hynix, Micron are acting as a unified cartel when there obviously isn't going to be a paper trail for secret meetings.
- AnthonyMouse 4mo ago
  > A business can choose to artificially restrict supply if they want, there's no mandate that they must meet demand. There is, however, no incentive to do this when prices are high unless you expect competitors to do likewise, since otherwise you're just handing the business to the others when they increase production. Which strongly implies that if that's what everybody is doing, they're colluding. > The hard part is how do you prove Samsung, SK Hynix, Micron are acting as a unified cartel when there obviously isn't going to be a paper trail for secret meetings. Which is the problem when that's what's happening, and why we should maybe change the law to infer the collusion from the outcome in cases where prices are high yet nobody is responding by increasing their market share.

brookst 4mo ago

Yeah your qualifier is important. If I have zyngots and suddenly the price goes through the roof, it is not collusion or illegal for me to raise my prices. Tacit collusion requires at least signaling. There has to be some intent. Like in the US rental market where Realpage coordinates tacit collusion. But if there is legitimately demand for far more memory than can be produced, it seems silly to claim collusion to raise prices.

omgwtfbyobbq 4mo ago
Does conscious parallelism require signaling? But yeah, if there's demand a limited supply, price increases from that are legit.
itopaloglu83 3mo ago
As George Carlin once said, these people know what’s good for them, they all went to same schools, and hang out at same places, they don’t need to have a secret meeting to collide.

laughing_man 4mo ago

Isn't it difficult to win on tacit collusion if you can't find some kind of document or email to show they were deliberately taking advantage?