Hacker News Reader

> The most insane ending to all of this that I can imagine

The most insane ending is that tarrifs are reverted but most of the price hike will stay for good.

Why would that happen, if it didn’t happen before the tarrifs?

Because companies make more profits when the prices are higher.

Under normal conditions, if one company increases their price then buyers will find an alternative.

When all the companies increase the price at the same time then there are no alternatives. Customers become acclimated to the new price.

But there then becomes an incentive to lower prices to capture more demand. I don’t think that tariffs will incentivize collusion any more often.

That's very risky for companies to do because because you might not capture that demand. If you fail then you just lost money.

One reason is buyers may only consider alternatives when prices increase.

If you’re lowering prices because your costs went down, then you haven’t lost money.

That's how market forces work, it's risky but it pays off until prices hit equilibrium.

Depends on the market. Markets with lots of competition will have to lower prices. With only 1 or 2 major players? They'll keep prices high based on backroom handshake deals or "i'm not moving till he moves"

Market forces will prevail.

Reply on news.ycombinator.com