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Why is inflation so sticky? It could be corporate profits

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Re: Why is inflation so sticky? It could be corporate profits

#311

Post by doublespanner »

mitthrowaway2 wrote: post #310
doublespanner wrote: post #309

Earlier quoted context omitted.

It's because both competitors are making the same calculation where a loss in market share is worth less than the per unit profit increase. This isn't really a matter of competition, it's that people's willingness to pay (in nominal value) is much higher. If people's willingness to pay were less, then increasing prices would loose a greater portion of the market.

How is the calculation you're describing different than the calculation of optimal pricing for a monopoly?

It's similar, but when the price of the product is closer to the willingness to pay, market share becomes important again.

It's also has an impact on what products get made, and investment in r&d. If you fall behind the competition in terms of quality, you loose marketshare.

Re: Why is inflation so sticky? It could be corporate profits

#312

Post by adwn »

0xy wrote: post #148
adwn wrote: post #141

Earlier quoted context omitted.

> The stores you'd probably promote, small mom and pop stores, generally have 50%+ margins. Yeah, no, they really don't.

https://www.statista.com/statistics/887938/convenience-store...

First, that's gross profit, which doesn't include the cost of paying the employees that work in the store, or the cost of paying "mom and pop" for the work they put in, or the cost for rent, electricity, heating, garbage collection, insurance, etc.

Second, judging by what little I can see without paid access, the "50% gross margin" refers to "health and beauty care products", not to all products sold by small shops in general.

Re: Why is inflation so sticky? It could be corporate profits

#313

Post by HonestOp001 »

DrNosferatu wrote: post #198

No shit, Sherlock: In Portugal, for most of 2022 to this day, the price of 1L own/white brand of semi-skimmed milk (one of the most basic and essential staple foods) has been the exact same - to the cent - on all different supermarket chains (Lidl, Audi, Auchan, Jerónimo Martins, Intermarché, Sonae, Dia, etc.) operating here. And, it has risen in steady small increments at exactly the same time in all of them, multip…

Negative. In America, the labels set their prices, this was first brought to focus by Coca Cola. They had an issue where the stores were driving the price higher to increase margins. Coca Cola started the five cent advertising campaign where they set the price. You can see this with bread items here, they place the price on the bag / sticker / wrapping technology.

There was a push by the stores to allow them to discard what the manufacturer set the price to, but the courts said no to that. This was the appliance manufacturers effort.

Why the profit margins, governments make is so hard to compete with the established players through regulatory compliance, the incumbents can. I have not seen increased profits in my business, and I had to increase the prices. That was done because of input costs. The manufacturers may be making more because they have found costs savings due to input prices going down Or they increased prices to factor in future increases

Re: Why is inflation so sticky? It could be corporate profits

#314

Post by WalterBright »

ShadowBanThis01 wrote: post #305
WalterBright wrote: post #282

Earlier quoted context omitted.

> not true when oligopolies run rampant Oligopolies are not able to increase the money supply by charging higher prices, so they cannot create inflation.

So you're saying that the recent spate of price increases isn't inflation. Got it.

I did not say that. Read again what I wrote.

Re: Why is inflation so sticky? It could be corporate profits

#315

Post by RhodesianHunter »

listenallyall wrote: post #263
RhodesianHunter wrote: post #228

Earlier quoted context omitted.

And yet wages remain flat while profits and inflation rise. The average person in this country already can't afford on two incomes what the last generation could afford on one. How sustainable is this?

Been hearing "unsustainable" for a long time. I believed it wholeheartedly for a while. Sure, we will have recessions again, perhaps we're in one presently, but do you think the USA is going to somehow collapse? It will likely see a gradual decline in living standards, I agree, but you are overlooking how bad the 70s were economically, when the Baby Boomers were in their 20s and 30s.

That's the thing though, we shouldn't be seeing a decline in living standards. Technology, productivity, efficiency are all up dramatically. We just have an oligarchic ruling class sucking up all the difference.

Re: Why is inflation so sticky? It could be corporate profits

#316

Post by ShadowBanThis01 »

WalterBright wrote: post #314
ShadowBanThis01 wrote: post #305

Earlier quoted context omitted.

So you're saying that the recent spate of price increases isn't inflation. Got it.

I did not say that. Read again what I wrote.

I did. Corporations are charging higher prices, and downstream consumer prices are up across the board. Nobody has proven a relationship to the money supply. Quite to the contrary, the Fed's interest-rate hikes have been largely ineffectual.

But you're welcome to step up...

Re: Why is inflation so sticky? It could be corporate profits

#317

Post by WalterBright »

ShadowBanThis01 wrote: post #316
WalterBright wrote: post #314

Earlier quoted context omitted.

I did not say that. Read again what I wrote.

I did. Corporations are charging higher prices, and downstream consumer prices are up across the board. Nobody has proven a relationship to the money supply. Quite to the contrary, the Fed's interest-rate hikes have been largely ineffectual. But you're welcome to step up...

The US did not have net inflation until after 1914. What happened in 1914? The government switch to fiat money where they could run deficits by just printing money.

The relationship with the government printing press and inflation is demonstrated over and over, in country after country.

Re: Why is inflation so sticky? It could be corporate profits

#318

Post by ShadowBanThis01 »

WalterBright wrote: post #317
ShadowBanThis01 wrote: post #316

Earlier quoted context omitted.

I did. Corporations are charging higher prices, and downstream consumer prices are up across the board. Nobody has proven a relationship to the money supply. Quite to the contrary, the Fed's interest-rate hikes have been largely ineffectual. But you're welcome to step up...

The US did not have net inflation until after 1914. What happened in 1914? The government switch to fiat money where they could run deficits by just printing money. The relationship with the government printing press and inflation is demonstrated over and over, in country after country.

So what? That doesn't prove that it's the ONLY cause of inflation.

Re: Why is inflation so sticky? It could be corporate profits

#319

Post by rhacker »

klysm wrote: post #68
rhacker wrote: post #59

Earlier quoted context omitted.

Technically does that mean the FTC can literally go after all the companies for collusive price fixing?

Tacit collusion isn’t illegal

It probably should be in the internet age. There is a huge cottage industry out there for fixing prices. I hope that the feds discover all the OTHER companies out there that are similar to RealPage.

Re: Why is inflation so sticky? It could be corporate profits

#320

Post by klysm »

rhacker wrote: post #319
klysm wrote: post #68

Earlier quoted context omitted.

Tacit collusion isn’t illegal

It probably should be in the internet age. There is a huge cottage industry out there for fixing prices. I hope that the feds discover all the OTHER companies out there that are similar to RealPage.

Yeah especially with the advent of algorithmic pricing it's going to get a lot harder to regulate
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