> Finally, and most critically, there is complete price transparency because everybody can see the prices everyone else charges just by looking at those big signs. If we take away any one of those facts, the whole thing will generally fall apart on its own. For example, if firms could somehow secretly discount and steal market share from their rivals, they have a significant incentive to do that and so on. ...
This is why many big retailers use consumers as a watchdog, typically with offers like "we guarantee you the lowest price, if you find cheaper elsewhere, we'll give you back the difference times 2!". That way consumers think the retailer is having their back and protecting them when actually they prevent other retailers from lowering prices by keeping the market share. Consumers should not tolerate that bullshit and go with the lowest retailer in the first place and realize that they're being used to rat on the cheaper retailer... but there's a good incentive to get the difference * 2.