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> Then, there is a switch to the most traditional of businesses with the most traditional business models. Who, the author argues, are engaging in price gauging
by adminu 2y ago
> Then, there is a switch to the most traditional of businesses with the most traditional business models. Who, the author argues, are engaging in price gauging. In the second paragraph he claims that apps cause this inflation
He is saying that the traditional businesses use an app that allows for a legal way of price gauging.
> The last paragraph portraits a stunning lack of economic knowledge, as companies raising prices in line with inflation obviously would not lower prices after the source of the inflation is gone.
The author claims, that these companies raise prices more than inflation based cost increases in production would allow for.
- gruez 2y ago>The author claims, that these companies raise prices more than inflation based cost increases in production would allow for. That's just supply and demand? People get mad that when there's an oil shortage, that oil companies raise prices above the cost of production, but they're happy to see oil companies' margin collapse when there's an oil glut.
- Pooge 2y ago> People get mad that when there's an oil shortage, that oil companies raise prices above the cost of production It's a bit different when they all (i.e. cartel) agree to keep the same price even after the shock has passed, isn't it?
- amazingamazing 2y agoif there's clear evidence to this, it's illegal
- bdangubic 2y agounder what statute would this be illegal?
- amazingamazing 2y agosherman act in usa
- bdangubic 2y agohow many companies - lifetime - have actually been charged, convicted and significantly impacted by the sherman act?
- BowBun 2y agoYou can get this information from google. If you're trying to make a point, just make it!
- VertanaNinjai 2y agoHere is a page DOJ publishes on that (at least for fines). https://www.justice.gov/atr/sherman-act-violations-yielding- https://www.justice.gov/atr/sherman-act-violations-yielding-... I also found this for criminal prosecutions under section 2 which is the section covering illegal monopolies. Pages 12 and 14 have some quick summary charts and tables. https://www.americanbar.org/content/dam/aba/publications/antitrust/journal/84/3/criminal-enforcement-section-2-sherman-act.pdf https://www.americanbar.org/content/dam/aba/publications/ant...
- dghlsakjg 2y agoGoogle, Facebook, Microsoft, Amazon are the ones in FANMAG off the top of my head. Also keep in mind that the existence of the law guides decisions around compliance. There is ample evidence that all of the big decisions at FANMAG are viewed through compliance with anti-trust as a concern. Basically, a lot of big companies haven't been prosecuted because they have armies of lawyers working on where exactly that law kicks in, and how much they can step over the line without putting themselves at serious risk. The existence of the law itself is a deterrence mechanism. It just seems like the justice department is hampered with a century old law in dealing with a modern world. I personally think that we should be more zealous in enforcing, or better yet, pass better laws. Move the line way back, essentially.
- Pooge 2y agoAccording to the author, there is - through an app - and they even admit to it.
- danny_codes 2y agoThe author’s entire thesis is that there isn’t a market for lots of goods because of oligopolies colluding. Supply and demand don’t work like the textbook says they will if there’s no market. He’s saying that almost all potatoes are sold by a couple firms, and those firms collude on price, effectively meaning (from a pricing perspective) that there is only one potato company. They therefore can charge whatever they want, up to the point of driving their customers out of business. This is in contrast to a healthy market, in which producers compete by lowering prices to the point where the producer would go out of business.
- amluto 2y agoWhat supply and demand? The supplies of these goods have had occasional disruptions but are largely unchanged. The demand has not changed in any material way. And yet the prices have increased, and those increases have far outstripped the increases in the cost of goods sold. It’s worth noting that, in classical economic theory, the price in a competitive market is set by matching supply and demand, but the price in a monopolistic market is set higher such that the profit (“producer surplus”) is maximized, which harms the buyers (“consumer surplus”) even more than the amount by which the seller benefits. The net loss is called deadweight loss, and one can argue about whether and how government policy should be arranged to minimize deadweight loss.
- pwg 2y ago> The supplies of these goods have had occasional disruptions but are largely unchanged. Those "disruptions" you refer to create periods of "lack of supply" (i.e., less of the goods). That is what the "disruption" is, a temporary reduction in the "supply" > The demand has not changed in any material way. True, but, during the period of "temporary reduction in the supply" (i.e., the disruption) Econ 101's supply/demand curve will predict that the price will rise to make the "demand" during the period of limited supply equalize with the new supply level due to the disruption. What often happens (and you see it most clearly with gasoline prices), is that the price reacts extremely quickly to the supply disruption by increasing fast (seemingly within hours). But then, when the "disruption" clears, and the supply amount returns to normal, the price tends to slowly drift downward (if it drifts downward at all).
- arrosenberg 2y agoForget about oil for a second. Why is a large box of cereal $8 at the supermarket? It costs pennies to produce, maybe a dollar in landed cost. The small box costs almost the same landed and it's $5, which is also absurd. There is no supply shortage of corn and sugar, and no glut of demand for cereal. I'm not stupid, I understand supply and demand. COVID was 4 years ago. Explain the $8 box of cereal.
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- DasCorCor 2y agoThey’re colluding to fix prices. That is a cartel. It is facilitated by a middleman app. Still unethical, and should be illegal.
- gruez 2y agoRight, but "companies raise prices more than inflation based cost increases in production would allow for" non-sequitur. There's plenty of ways that prices can raise faster than input costs, that doesn't imply price fixing.
- ddtaylor 2y agoThe author is doing some extra work to connect dots that might otherwise be better left connected by the readers.
- MetaWhirledPeas 2y ago> that doesn't imply price fixing But Potatorac and Agri Stats do. They are price-fixing right out in the open.
- naijaboiler 2y agosame thing realpage was doing for renting. It is 21st century version of a cartel. Cartel via an app. It should be illegal. I was hoping feds going after RealPage would be a deterrent to that trend. But with the new admin, yeah thats over.
- itsoktocry 2y agoTrue market clearing prices depend on easy entrance and exit of participants in the market. Apparently that isn't the case with potatoes, per the article.
- scott_w 2y agoThe article is very clear in the mechanism: he posits companies are “blindly” colluding by using third party price information to inform their decisions on their own pricing. This isn’t “collusion” because they’re not the picking up the phone to each other to discuss price fixing. They’re allowing a third party to tell them what others are charging and “coincidentally” decide that they’d like to charge that, too. If this fits the legal definition of a cartel and price fixing, I can’t say. I’m not a lawyer nor do I know what US law says on this matter. However, it’s fair to say there’s a bad smell to the whole affair.
- mrunkel 2y agoNo, the article says that the suppliers send data to a central service, which then tells them the optimal price, this service bases this price based on data sent by all other suppliers, and presumably gives all suppliers the same price.