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Conversation Between muddi900 and itchyeyes
Showing Visitor Messages 1 to 3 of 3
  1. itchyeyes
    11-13-2008 12:18 PM
    itchyeyes
    Ah, I see. In that case, I think we're more or less on the same page. I was speaking more in regards to collaboration between competitors to fix prices above the natural market equilibrium, which was essentially what the case discussed in the OP was about.
  2. muddi900
    11-13-2008 01:26 AM
    muddi900
    I should first clarify what I meant by price fixing. While companies do fix a price, they do not actually meet and agree(conspire, if you may). They do it as it concerns their own interests and if all else is truly equal. As if all have the same or similar cost, there's a point that no one will go lower from their price point.

    Again, its an everything else equals scenario. I would be an idiot if I am not selling it cheaper if it costs me less!

    I also disagree with consumer demand for quality, but that's a whole other topic!
  3. itchyeyes
    11-12-2008 04:28 PM
    itchyeyes
    See my point is that the free for all market is only successful if consumers find the quality acceptable though. Otherwise, they will still choose the higher priced goods.

    That's rarely the case however, which is why you usually only see unfettered competition in commodity markets, where quality is largely irrelevant. With most other goods, quality is important and consumer desire for quality keeps firms in business, not price fixing. Also keep in mind that the point of efficient markets is not to keep firms in business, but to facilitate the efficient production and distribution of goods. It is not societies concern to keep firm A or B in business is they are not producing a desired product at a competitive price.

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