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Libertarians will defend this: Companies colluding to Jack up the price is free market
Posted on 1/27/22 at 7:39 pm
Posted on 1/27/22 at 7:39 pm
The only way to stop them is for a new company to make insulin (they could then just buy out) or for the gubmint to step in and make laws forbidding the practice of companies colluding on price, or forbidding “anticompetitive trade practices”.
So in a libertarian paradise, company X makes insulin and tells company Y that “let’s charge $3000 a month since they have no where to go.” X and Y agree, and do so. Then Z tries to break into the market, but X and Y offer Z $300,000,000 for the company, and buy it. Or, they drop their price under cost for a while to bankrupt Z, and then Go back to $3000.
PS: I have no idea what this meme means, but it looked funny so here it is.
So in a libertarian paradise, company X makes insulin and tells company Y that “let’s charge $3000 a month since they have no where to go.” X and Y agree, and do so. Then Z tries to break into the market, but X and Y offer Z $300,000,000 for the company, and buy it. Or, they drop their price under cost for a while to bankrupt Z, and then Go back to $3000.
PS: I have no idea what this meme means, but it looked funny so here it is.
12
Posted on 1/27/22 at 7:43 pm to cokebottleag
What you are missing is without FedGov being involved in the first place the insulin would be $15.75 and there would be competition at that price.
Posted on 1/27/22 at 7:44 pm to cokebottleag
Everybody likes capitalism until it is time to do capitalism things
Posted on 1/27/22 at 7:45 pm to WhereisAtlanta
Thanks for playing, but no. There is nothing to stop these companies from jacking up the price. It takes a lot of capital to start an insulin factory, you can’t just plant one and watch it grow.
Posted on 1/27/22 at 7:47 pm to cokebottleag
The market regulates most products, a company can't step in and overcharge for a product without extreme government hurdles preventing free and open competition in the market. In a Libertarian paradise you would have no government interference in starting and running a company.
The libertarian ideal sure is more appealing than what the Republicans and Democrats have put out over the past 100 years. I don't understand why Republicans and Democrats are so afraid of self governance and some true freedom.
The libertarian ideal sure is more appealing than what the Republicans and Democrats have put out over the past 100 years. I don't understand why Republicans and Democrats are so afraid of self governance and some true freedom.
Posted on 1/27/22 at 7:49 pm to cokebottleag
Is this sarcasm?
I’ve never heard of libertarians supporting duopolies and confusing it with the free market. At least, not a libertarian that has a basic understanding of economics.
In your example, if there are no other market suppressive forces other than two dominant companies exerting control over market price and keeping it artificially inflated; there would likely be far more than one other competitor trying to enter such a lucrative market. So many, that it would not be feasible for the two dominant existing firms to buy everyone else out.
New firms would keep launching until an equilibrium occurs between supply and demand at the market clearing price.
I’ve never heard of libertarians supporting duopolies and confusing it with the free market. At least, not a libertarian that has a basic understanding of economics.
In your example, if there are no other market suppressive forces other than two dominant companies exerting control over market price and keeping it artificially inflated; there would likely be far more than one other competitor trying to enter such a lucrative market. So many, that it would not be feasible for the two dominant existing firms to buy everyone else out.
New firms would keep launching until an equilibrium occurs between supply and demand at the market clearing price.
Posted on 1/27/22 at 7:51 pm to cokebottleag
Something similar like this happened about 15 or so years ago in Korea where several companies had made a pact about not lowering their prices on LCD screens. It went on for some time but eventually it was broken up since they were sued for "price fixing."
Posted on 1/27/22 at 7:56 pm to cokebottleag
Except the pending charge of collusion and price-fixing, which is usually illegal, depending on where they do business.
If they are located within the US, that is a great way to get an Anti-trust lawsuit thrown their way.
If they are located within the US, that is a great way to get an Anti-trust lawsuit thrown their way.
Posted on 1/27/22 at 7:58 pm to cokebottleag
I mean… my philosophy technically allows this. Libertarianism is a bit of an idealistic ideology naively hoping with true freedom people won’t do this, but they clearly will. This quote is why libertarians always lose to authoritarian ideologies:
My principles is why I lose.
My principles is why I lose.
Posted on 1/27/22 at 8:00 pm to Southof10Tiger
quote:
Is this sarcasm?
I’ve never heard of libertarians supporting duopolies and confusing it with the free market. At least, not a libertarian that has a basic understanding of economics.
We don’t support this, but what in our ideology stops this? Nothing. It’s not what we want whatsoever, but evil people will use our principles against us. They have no principles whatsoever other than any means to gain power.
Posted on 1/27/22 at 8:00 pm to cokebottleag
I'll take the imperfections of capitalism over the core features of socialism, any day.
Posted on 1/27/22 at 8:07 pm to cokebottleag
quote:
Companies colluding to Jack up the price is free market
When we had a free market this wouldn't have happened. The competition would have driven the price down.
This is what free markets* look like when the government is in control.
Posted on 1/27/22 at 8:09 pm to OMLandshark
I subscribe to libertarian principles as well and the basis of free market economics does less to contribute to conditions such as duopolies and monopolies than extreme government regulation.
Over burdensome regulations, tariffs, and repressive economic policies put in place by governments are what leads to market consolidation. Not the free entry and exit of market participants.
The example in the original post is probably a bit incomplete as well as over simplified.
Over burdensome regulations, tariffs, and repressive economic policies put in place by governments are what leads to market consolidation. Not the free entry and exit of market participants.
The example in the original post is probably a bit incomplete as well as over simplified.
Posted on 1/27/22 at 8:12 pm to Maytheporkbewithyou
Except they don’t always. Sometimes companies collude. In fact, there used to be guilds of tradesmen that formed for the purpose of price fixing, and if you didn’t join they would… well, they made you join.
In a true free market, there is nothing to stop delta, American, and United (and the others) from forming a guild and fixing prices. Nothing. You don’t see this happen because of regulation saying you can’t.
In a true free market, there is nothing to stop delta, American, and United (and the others) from forming a guild and fixing prices. Nothing. You don’t see this happen because of regulation saying you can’t.
Posted on 1/27/22 at 8:21 pm to cokebottleag
There are other airlines besides those you listed and others would enter the market. Thirty years ago there were more airlines than there are now but government regulation and union collective bargaining forced some out of business and led to consolidation (both concepts that are adverse to libertarian economic principles).
Still, there are new airlines that have started so that they can try and gain their share of the producer’s surplus, which if you are artificially inflating the market price, would attract more competition.
Still, there are new airlines that have started so that they can try and gain their share of the producer’s surplus, which if you are artificially inflating the market price, would attract more competition.
Posted on 1/27/22 at 8:30 pm to Southof10Tiger
I love how it is an assumption among everyone here that the most efficient market is many competitors, and not a duopoly.
For many industries that is the most viable structure, even libertarian economists concede that.
In this case, any new entrant to the airline market is going to tell their investors “look at all the money we can make!” Pointing to the price fixing. They aren’t going in saying “we can make less profit than is currently being made!”
They also have to contend with airports which can collide with airlines. Are you going to start a completely separate economy with airports, airlines, and so on?
For many industries that is the most viable structure, even libertarian economists concede that.
In this case, any new entrant to the airline market is going to tell their investors “look at all the money we can make!” Pointing to the price fixing. They aren’t going in saying “we can make less profit than is currently being made!”
They also have to contend with airports which can collide with airlines. Are you going to start a completely separate economy with airports, airlines, and so on?
Posted on 1/27/22 at 8:35 pm to cokebottleag
Yes because nothing ever works when the free market is allowed to occur. Why not allow citizens to buy their prescriptions from overseas markets?
Problem solved.
Problem solved.
Posted on 1/27/22 at 8:36 pm to cokebottleag
They would actually charge what the market would bear. If they won’t do it, someone else would.
This post was edited on 1/27/22 at 11:07 pm
Posted on 1/27/22 at 8:57 pm to cokebottleag
quote:
Thanks for playing, but no. There is nothing to stop these companies from jacking up the price. It takes a lot of capital to start an insulin factory, you can’t just plant one and watch it grow.
So in your imaginary world there are only two large companies? And investment firms don't exist to provide capital?
That said, government intervention to break up anti-competitive situations can be a necessary evil.
Posted on 1/27/22 at 9:03 pm to cokebottleag
Southwest Airlines literally did this by repurposing old airports starting with Love Field in Dallas. They seem to be doing just fine.
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