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> informal agreement to keep transaction fees about the same This would be like, ridiculously illegal. It's also not practical; if you can steal customers, the
by paytonjjones 3mo ago
> informal agreement to keep transaction fees about the same
This would be like, ridiculously illegal. It's also not practical; if you can steal customers, the incentive to undercut is very strong.
- bdcravens 3mo agoOf course, but that's the thing about "informal" agreements: presumably there's no record of it. Price collusion happens way more than most realize. I was at a trade show for my employer when a competitor walked up to our booth and out loud proposed that we should all fix our prices. We didn't of course, but the brazenness of saying something like that out in the open like was what surprised me.
- stavros 3mo agoThe good thing about price collusion is that it's hard to coordinate. If even one competitor defects (and they have every advantage to, as they'll win big), then the cartel falls apart.
- tough 3mo agosounds like an org prisonner's dilemma
- stavros 3mo agoExactly.
- PunchyHamster 3mo agoThat assumes that * it instantly brings them a ton of consumers * they have capacity to serve those customers if they don't competitor can just keep higher price (especially if it is just small middleman fee most people might not care that much about) And even if both of those are true worst possible case is them expanding to handle influx of customers and then competition following in few months, making their investment moot
- paytonjjones 3mo agoThat's true, but the thing about price fixing is that it basically guarantees these conditions. The price is artificially high -> there's a ton of demand waiting to be unlocked by the "potential energy" gated behind the unnatural price Capacity is easy to plan around; get too much and you can just raise the price again.
- eek2121 3mo agoOne of the big rules of commerce is that competing on price is generally a no-no for large markets. Usually, the powers that be would rather compete on a perceived value; that is how “informal price collusion” works. Price/cost is the last thing you compete on unless you have a wholesale advantage, which nobody in this particular industry does (visa/mastercard set core rates) Source: I’ve worked with higher ups in numerous commerce operations. Commerce is actually even worse than many realize. Look up pepsi and walmart as a small example.
- Terr_ 3mo agoI'd like to point out that the the idea rests on an inefficient market, where price/transaction information was kept secret long enough to turn the trust-violation into worthwhile profit. In contrast, an efficient market with perfect price information means other cartel members would instantly notice and change their prices to punish the defector.
- ds2 3mo ago[dead]
- axus 3mo agoI thought that only happened in hilarious corporate training videos
- nearlyepic 3mo agoRead the DoJ’s case they recently closed on price fixing in the egg market. Apparently those videos are like that because that’s how it goes down in real life. You would think people would be smarter but maybe we only see the stupid ones that get caught.
- yawniek 3mo ago> This would be like, ridiculously illegal. It's also not practical; Not if you pay a bit of dividends to jared or dtj
- doctorpangloss 3mo agoi just wonder why you think fees are high. seemingly the only thing that keeps fees low elsewhere in the world is regulations.
- SkiFire13 3mo agoStripe's and Braintree's fees are like night and day, at least for us.
- Rebelgecko 3mo agoIs it? I can imagine scenarios where they're better off accepting a duopoly if it allows the profit margin to be 3x higher
- paytonjjones 3mo agoEasier with a duopoly for sure (if there's something restricting new entrants to the market, that's a big problem in its own right), but even so, it's a prisoners dilemma. They are better off cooperating, but if one defects first they can screw the other one, so it relies on trust.