But a smart player would slightly undercut the competition and gobble up the market share. If each player acted independently, that is what would happen. There does indeed need to be some sort of collusion to prevent one player from playing the optimal strategy.
The factor that the greedflation proponents seem to ignore is that people were spending in record numbers after the lockdowns ended, and people spent the money that was saved in record numbers. This is reflected in GDP figures. There was a huge drop in 2020, followed by a massive spike in 2021.
> But a smart player would slightly undercut the competition and gobble up the market share.
You assume "slight undercut" => "gobbled up market share" but this is hard to substantiate.
Any grocery store in the US will show you examples of name-brand products next to slight-undercut store-brand alternatives where many people continue to buy the name-brand one, despite the price difference being super obvious every time the purchase is made. Real markets aren't econ 101.
Prices go up much more easily than they go down. https://www.investopedia.com/terms/p/priceratchet.asp In many markets consumers aren't perfectly evaluating the options from scratch on every single purchase with price the only factor, and a company doesn't want to have to accept a drop in price any more than an employee wants to have to accept a salary cut. So prices go up much more easily than they go down, since they can get forced up but require someone to take a gamble to get them to start moving down.
Name brand products are often perceived to be superior (whether or not that perception is warranted, is it's own topic) so no doubt they can command a premium. Mercedes vs Honda. I've ridden in plenty of Hondas that are just as comfy as Mercedes, but the fact that the former commands higher prices is not price fixing or "greedflation".
Prices tend to go up because inflation is much more common than deflation. That I don't doubt. But the narrative behind "greedflation" is that something other than market conditions are causing inflation.
> where many people continue to buy the name-brand one
presumably those people are acting irrationally. Or the name-brand ones do provide more value for them.
But hearsay from various news sources have mentioned more and more of the generic/store-brand goods sales are up. So i don't believe that people actually will continue to buy name-brand stuff that is of the same quality as the store-brand.
But a smart player would slightly undercut the competition and gobble up the market share. If each player acted independently, that is what would happen. There does indeed need to be some sort of collusion to prevent one player from playing the optimal strategy.
The factor that the greedflation proponents seem to ignore is that people were spending in record numbers after the lockdowns ended, and people spent the money that was saved in record numbers. This is reflected in GDP figures. There was a huge drop in 2020, followed by a massive spike in 2021.
There are indeed significant issues with the greeflation narrative: https://www.economist.com/leaders/2023/07/06/greedflation-is...
> But a smart player would slightly undercut the competition and gobble up the market share.
You assume "slight undercut" => "gobbled up market share" but this is hard to substantiate.
Any grocery store in the US will show you examples of name-brand products next to slight-undercut store-brand alternatives where many people continue to buy the name-brand one, despite the price difference being super obvious every time the purchase is made. Real markets aren't econ 101.
Prices go up much more easily than they go down. https://www.investopedia.com/terms/p/priceratchet.asp In many markets consumers aren't perfectly evaluating the options from scratch on every single purchase with price the only factor, and a company doesn't want to have to accept a drop in price any more than an employee wants to have to accept a salary cut. So prices go up much more easily than they go down, since they can get forced up but require someone to take a gamble to get them to start moving down.
Name brand products are often perceived to be superior (whether or not that perception is warranted, is it's own topic) so no doubt they can command a premium. Mercedes vs Honda. I've ridden in plenty of Hondas that are just as comfy as Mercedes, but the fact that the former commands higher prices is not price fixing or "greedflation".
Prices tend to go up because inflation is much more common than deflation. That I don't doubt. But the narrative behind "greedflation" is that something other than market conditions are causing inflation.
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> where many people continue to buy the name-brand one
presumably those people are acting irrationally. Or the name-brand ones do provide more value for them.
But hearsay from various news sources have mentioned more and more of the generic/store-brand goods sales are up. So i don't believe that people actually will continue to buy name-brand stuff that is of the same quality as the store-brand.
Executives are bragging in earnings calls about their supply chain prices falling and how they're keeping prices high...
Where?