Here’s what it looks like from a business perspective: if I am a meat packing company, I need to go to the farmers and buy the pork that is going to be processed by my factory. The pig farmer says I will sell you my pork for four dollars a pound. I asked for him to sell at two dollars a pound, but he simply refuses and sells to somebody who paid is willing to pay a higher price.
Now, I can do two things to lower the price:
I can collude with all of the other meat packing companies and refused to buy pork at four dollars a pound, and we set our willing price at two dollars a pound. If we get enough other companies to collude together as a cartel, then we can force the prices down. This is generally illegal.
The second option is through consolidation: first, I get enough money to buy up all of the other meat packing companies. Then when I go back to the pig farmers, they only have one buyer to sell to, which is my business. So I get to set the prices, which will be at whatever price I stipulate. Walmart is famous for doing this.
No… Not to my understanding. Inflation, while an average, is not equally rising across all things. It is possible for the few that control food to raise prices together. Same with clothing and other industries. I think it’s also exacerbated by the shipping fiasco during covid and the fact that corporations always want more profit. As a general rule, any time prices rise for any reason, and shipping can make everything rise together, if people still pay that price, it will not be lowered.
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It’s called price leadership and it is an extremely well established phenomena in economics.
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That is written like a true economist.
Here’s what it looks like from a business perspective: if I am a meat packing company, I need to go to the farmers and buy the pork that is going to be processed by my factory. The pig farmer says I will sell you my pork for four dollars a pound. I asked for him to sell at two dollars a pound, but he simply refuses and sells to somebody who paid is willing to pay a higher price.
Now, I can do two things to lower the price:
I can collude with all of the other meat packing companies and refused to buy pork at four dollars a pound, and we set our willing price at two dollars a pound. If we get enough other companies to collude together as a cartel, then we can force the prices down. This is generally illegal.
The second option is through consolidation: first, I get enough money to buy up all of the other meat packing companies. Then when I go back to the pig farmers, they only have one buyer to sell to, which is my business. So I get to set the prices, which will be at whatever price I stipulate. Walmart is famous for doing this.
No… Not to my understanding. Inflation, while an average, is not equally rising across all things. It is possible for the few that control food to raise prices together. Same with clothing and other industries. I think it’s also exacerbated by the shipping fiasco during covid and the fact that corporations always want more profit. As a general rule, any time prices rise for any reason, and shipping can make everything rise together, if people still pay that price, it will not be lowered.
Removed by mod