beaups
join:2003-08-11
Hilliard, OH | Collusion Implies the companies are working together to keep the prices high....I'd like to see your evidence of that.
The logical explanation of all of the similar pricing/plans/etc. is that getting in a price war is a loser for all companies involved. The minute a carrier engages in that (ie sprint) the other companies have to respond...then no company gained anything. All that would happen is the companies would make less money and gain no new customers.
Think of your local gas station that has a competitor next door. If station A lowers his price $.10 then stations B responds. The net result is both stations lose $.10/gallon in revenue and margin. This is smart business, not collusion. |
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 jmn1207Premium
join:2000-07-19
Ashburn, VA | Theory of Oligopoly While this study about the New Brunswick gasoline industry is over a decade old, it fundamentally pertains to most oligopolies, of which both our own gasoline industry and our wireless service options would be included.
»findarticles.com/p/articles/mi_h···ent;col1
"This study develops a model that explains how a cooperative solution can be sustained in an oligopolistic industry, (namely New Brunswick's gasoline industry) despite the inherently noncooperative strategies of the players, who are resolved to maximizing their individual (rather than joint) profits."
Excerpts from the conclusion....
"There is a tendency toward cooperative market behaviour among oligopolist competitors because each has foresight, and correctly expects rivals to have similar foresight of its own strategic moves. Oligopoly firms are therefore less likely to adopt aggressive strategies that thereby lead to accelerated competition that might jeopardize chances of higher profits. However, if firms believe that rivals are less than perfectly rational (and such a belief turns out to be right), then they may resort to aggressive postures that result in noncooperative strategies and quasi-competitive outcomes of the usual Cournot solution.
Applied to the gasoline industry in New Brunswick, it is seen that the model adequately reflects the pattern of price setting and rival interactions among the oligopolist firms that are involved in the industry: each firm adopting a strategy that results in a cooperative solution in an otherwise inherently noncooperative game setting. The empirical analysis seems to bear evidence of a general tendency for price fixing at best, and outright tacit collusion at worse."
Our own government appears to be hopelessly rooted in the conglomerate garden. At this point, I believe the Federal Trade Commission is useless and completely under the control of the world's largest corporations operating within our borders. Unless a company becomes careless and politically polarized, there is no reason to believe that we will not continue to see similar trends in all major industries, if they don't already exist. |
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beaups
join:2003-08-11
Hilliard, OH | Nice article, and my point to a degree. What is the solution? I just can't see any business that would be in a hurry to slash prices only to watch their competitors do the same...with no gain to either. Why would they?? |
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| reply to beaups
Re: Collusion said by beaups:Implies the companies are working together to keep the prices high....I'd like to see your evidence of that. The logical explanation of all of the similar pricing/plans/etc. is that getting in a price war is a loser for all companies involved. The minute a carrier engages in that (ie sprint) the other companies have to respond...then no company gained anything. All that would happen is the companies would make less money and gain no new customers. Think of your local gas station that has a competitor next door. If station A lowers his price $.10 then stations B responds. The net result is both stations lose $.10/gallon in revenue and margin. This is smart business, not collusion. Cricket and Boost, and Boost ironically is owned by Sprint. Prices in America are a complete sham compared to just about anywhere else, T-Mobile is nice little example, who offer prices about a 1/4 of US cost in their home court of Germany. It is price fixing, just as mentioned above. "The fact that this plan exists, and used to cost half as much as it does now, speaks volumes about the problem with the wireless broadband market. Collusion among the four carriers is so obvious it just screams out at every passerby." One only needs to look back to what happened to Ma Bell and see, this is in no way different, you just have 4 carriers instead of 1 that are national. "Price fixing is an agreement between business competitors to sell the same product or service at the same price." I think that pretty much sums it all up, if Sprint had 1/2 a brain they would bring back unlimited data plans, but ultimately they decided to join the cap bandwagon.
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Capturing the images of Colorado
»jdebordphoto.com |
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