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Comment by hn_throwaway_99 | Hacker News Reader

The "greed" aspect is always bullshit unless there is a specific instance of market failure like monopoly power or collusion. This has definitely happened, so I'm not discounting it, but in those cases folks should just say the issue is monopoly concentration or collusion.

Saying "greed" comes from people who fundamentally believe economics doesn't exist, or don't understand it. Everyone in the economy is "greedy". Consumers want to pay the lowest possible prices, and producers want to generate the most profit. Nobody starts a business to be a charity, and businesses will always set their prices to maximize profits.

If prices have gone up, the question to ask is why. Is there not enough competition? Have input prices risen? Why are consumers willing to pay more? Saying greed is just a bullshit boogeymanization that politicians like to spout.

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Because markets are neither rational nor perfectly elastic.

Which was also true before COVID. So what has changed?

Shock moved the price equilibrium to new higher price point. And big enough share of demand accepted that new price point.

> And big enough share of demand accepted that new price point.

Exactly - this is literally econ 101, no appeals to "greed" needed.

As they say, the cure for high prices is high prices. You already saw this in a number of different areas. Fast food prices outpaced what people were willing to pay, so people stopped eating out and businesses needed to adjust accordingly.

> As they say, the cure for high prices is high prices.

Your line of reasoning is downplaying the fact that we don't exist in a world with perfect markets or rational consumption habits.

There are multiple clear cut examples of producer collusion and oligopoly formation in the past few years - including in the food industries (see eggs and pork in the past 5 years). Food being essential for life means consumers can't interact with the market rationally, just like they can't for insulin, transportation that enables income, and so on.

Fine, but blaming price increases on "greed" is still just as idiotic. Yes, market participants are "greedy" - sellers want to make the most money and buyers want to spend the least.

If only McDonalds charges $20 for a burger instead of $10, people will go elsewhere.

If everyone charges $20 for a burger, people will still go to McDonalds. In such a state, no individual place would dare charge $10 again. Why cut revenue to nearly half? It’s not like they have the capacity to sell 20x the usual volume…

I’m not convinced that basic economics works when output capacity isn’t fully scalable.

Same reason no lawn care team tries to deeply undercut competitors - they can only mow so many! (Barring that they hire more helpers)

That’s an uncompetitive market. No one can outcompete on service, so they can only compete on price, but why would you in such a circumstance, it would only hurt you, so nobody does.

This is what people seem to forget... you don’t need monopolies or collusion for markets to be uncompetitive. Collusion works fundamentally because participants aren't competing with each other... not for the fact people made a secret agreement. It is entirely possible for markets to be completely uncompetitive even without a monopoly or any collusion going on.

Your examples here are better known amongst economists as the Bertrand–Edgeworth model (https://en.wikipedia.org/wiki/Bertrand%E2%80%93Edgeworth_mod...)

> Why cut revenue to nearly half?

Because, to quote Jeff Bezos, your margin is my opportunity. And did he ever squeeze every drop from that opportunity. Just ask the brick and mortar stores in your street.

> I’m not convinced that basic economics works when output capacity isn’t fully scalable.

Economics works for land, which isn't scalable.

> Same reason no lawn care team tries to deeply undercut competitors

That works right up until Fred down the road loses his job, and then it dawns he could be making more money with his mower because of those sweet fat margins those other lawn care people thought they could keep all to themselves.

> Because, to quote Jeff Bezos, your margin is my opportunity. And did he ever squeeze every drop from that opportunity. Just ask the brick and mortar stores in your street.

Sure and now after having become the Shoggoth monopoly, Amazon is now increasing fees. Squeeze your competitors out via unlimited money and then begin to squeeze your customers after you become of the lone poles in the forest.

What part of "Amazon's margin is a competitors opportunity" aren't you groking?

The one where being the dominant player and executing anti-competitive practices removes any opportunity. Being a sufficiently big bullying tree chokes out all future undergrowth for others

It's a shame you're getting downvoted (and I probably will too), but I have to say this is one of the few rational and correct posts in this thread. Most people can't look at markets objectively because they're actively participating in them and are therefore emotionally involved. As you said, the bid side seeks the lowest price and the ask side seeks the highest price. You don't get to judge the motivation of market participants on either side. The price is what it is because two parties decided to make a deal at a certain price level. The seller is no more to blame for rising prices than the buyer is because they were willing to pay it.

This is absolutely untrue. The rational actor model is no longer supported by evidence. In fact, it’s supported by no evidence.

Name one thing cheaper than it was 6 years ago…

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