31–40 of 41 posts
I'll never understand why people decide to blog about topics in which they don't have any background studies.
Earlier quoted context omitted.
It's also worth mentioning that such activities are generally illegal. The issue is more the enforcement of the laws than it is the laws themselves.
The problem is that "illegal" in the context of a corporation means a fine. If the fine is less than the extra revenue generated (and it often is), there's no reason not to engage in the illegal behavior. From the bread pricing scandal, the amount of coordination that was going on between supposed competitors is crazy. The fact that it took "a decade and a half" to prosecute the case means that much more subtle collu…
I think it's a bit worse than that.
Take a look at sports where plenty of teams will very willingly over-pay for players in terms of salary or even trade say 4 draft picks for a player when you'd expect at least 1 of those picks to draft somebody of a similar caliber.
In situations where the individual can personally gain (say from winning playoffs or a big bonus from extra sales) and the team (corporation) would be liable for the downside there's incentive to make a technically losing move. If the team doesn't do well you're fired anyways so it doesn't matter how much of a long-term bind you cause. Just like if the corporation takes a fine 5~10 years later like you've definitely gotten some fat bonuses in the interim that won't be clawed back.
It shocks me that this article could be written without mentioning the phrase "price elasticity" a single time (a word I learned in a class literally numbered "econ 101").
The author has no background studies on economics.
The desire to extrapolate economic interpretations from toy examples is unending. See also the two-people-with-cows-on-an-island example that gets paraded around and has never existed except in the heads of the terminally marginal-pilled crowd.
All of this stems from the idea that independent actors will create an "efficient" market to reach a price equilibrium in the most Econ 101 way possible with an awful lot of hand waving. This ignores the desire and ability for actors to put their thumbs on the scales.
Markets exist to extract wealth from participants to support the current economic order. This is done through lobbying, rent-seeking, putting up barriers (or enclosures if you prefer), restricting competition, using market power to crush competitors and reaching a monopoly or oligopoly to maximize wealth extraction.
Earlier quoted context omitted.
> That “equlibrium” is an assumption that there are forces in the market that will moderate excess - that the market is self-balancing. This is the argument against regulation or government intervention. > For example, it might be assumed that if supply shrinks, that prices will increase, which will reduce demand because fewer people can afford it, which will lead to a rebound in supply - which means prices will drop…
The author's point here seems to be a bit different than price-elasticity, though. If this were a price elasticity article, then you'd expect this sentence: > There’s another possibility, however. Imagine that there is a demand for a specific luxury good - say, ivory from elephant tusks. to be followed with something like "but as it happens, in some cases like luxury goods, demand can actually increase as prices incr…
Good summary of the articles position though.
Earlier quoted context omitted.
It's also worth mentioning that such activities are generally illegal. The issue is more the enforcement of the laws than it is the laws themselves.
The problem is that "illegal" in the context of a corporation means a fine. If the fine is less than the extra revenue generated (and it often is), there's no reason not to engage in the illegal behavior. From the bread pricing scandal, the amount of coordination that was going on between supposed competitors is crazy. The fact that it took "a decade and a half" to prosecute the case means that much more subtle collu…
This doesn't rationally follow at all.
The rareness (low supply) of a good is the net sum of how hard it is to obtain, due to all the possible reasons for that.
More poachers may enter the market, but with fewer elephants left alive, they cannot find elephants so easily, which means it takes more time and effort: the MTBE (mean time between elephant) goes up, making the hunt more costly. They may have to engage in increasingly hostile and violent turf wars with other poachers.
More poachers entering the market will not prevent a reduction in demand; it isn't something "instead of reducing demand".
If the market maintains the same level of interest in the good, the demand curve stays the same, and the only thing that changes demand is the current price point, which determines where on the demand curve the market is.
The author of the article doesn't seem to understand the difference between a reduced demand due to a movement of price along the same demand curve and actually reduced demand, whereby the market is less interested in the good, and buys less of it at every price point.
One odd thing about economics is that people will be familiar with roughly half of an introductory textbook, and then think they know everything about the subject. The fact that there is such a thing as "market power" is understood by every economist, and is central to the topic of "industrial organization". Increases in market power are even one of the standard explanations for the business cycle (they call them "ma…