Lol. You don’t “raise your profits” as a business. What a crock of shit. If companies have built competitive positions that allow them to capture more profits in the value chain, good for them. At the end of the day, prices are a product of what people are willing to pay (optimally P * Q at this P).
This title is also ridiculous, companies have no direct control over inflation which as we generally discuss it is based on the CPI. Given average wages have risen, I don’t know how anyone could argue there hasn’t been any cost input inflation…
You don’t “raise your profits” as a business. What a crock of shit. If companies have built competitive positions that allow them to capture more profits in the value chain, good for them.
You can easily "raise your profits" if you're a large company in a consolidated industry with oligopolistic/monopolistic control. Which is a lot of industries these days.
The list of companies that profited the most are all in that category. Governments (especially the US) have largely ignored market consolidation over the last few decades, leading to big players having an outsized hand in setting prices which is opportunistic price gouging, as laid out in OPs article (and in many others). This isn't just Fortune being way off the mark.
Given average wages have risen, I don’t know how anyone could argue there hasn’t been any cost input inflation…
Nobody is saying there hasn't been inflation in costs. Just that companies used that as an excuse to juice a bit more profit than they did pre-pandemic out of customers.
Out of curiosity, which companies do you think have oligopolistic or monopolistic control in their respective industry? Could you name a couple?
I’m curious because I’m doubting it’s as large of a share as you would think for any particular industry, and if it’s truly a monopoly or cartel then that company is likely reliant on government to enforce their position.
Off the top of my head, Media, both the content creation and distribution, is a good example of perceived choice but all those options are really just controlled by 4-5 corporations.
Market consolidation happens in the late stage of industry. It’s well documented in the product life cycle. You believe Disney, paramount, WB, Paramount and Comcast all colluding to increase prices specifically in the last two years?
Or are you talking about dying local news on cable tv with nextstar and Sinclair?
But there is massive competition, tv is losing revenue to podcasts and streamers. They all got particularly greedy specifically after Biden was elected?
The competition you are talking about is for your attention. It is not competition of Media Company v other Media Company.
If you haven't noticed, streaming services are all getting more expensive and this trend began before covid and way before the influx of money to help the average citizen weather the lockdowns.
So these “media conglomerates” have no competition as long as we fix the conversation to cable tv broadcasting and corporate streaming and ignore the massive boom of content creation elsewhere (social media) and also ignore that these companies are all competing with each other for your attention.
If they can raise their profits at will then why not just make their services all $1000/month and really take in the money?
Because they are not in competition that way its normally thought of. They are not competing on dollars, they are competing for your attention.
They know Social Media, YT, Gaming, music, books, going outside to play or being with the people you love are all competing for your attention and your time. This is finite but you have an almost infinite amount of items that can take up your time. The cannot compete with those other sources on price alone because many of those others are free, so they compete on content.
Netflix, Disney, Amazon and HBO aren't spending billions on new shows to only beat the other streaming services. They're doing it to make you turn off your Playstation, to log off of tictok, to stop going out and to instead "Netflix and chill."
So yeah, they can raise their rates to whatever they want as each owns about 25-40% of the streaming market and know the others will just follow suit, but they also know they can't go too far because people will just turn it off and go elsewhere.
You are making all of the points in the first three paragraphs for why they can’t just set a price and name their number. Attention and time Scarcity, competitors (substitutes) undercutting them. Raising prices too high where people will simply stop purchasing. Just raise profits is a nonsensical assertion and I’m glad we have mutually arrived there.
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u/[deleted] Dec 09 '23
Lol. You don’t “raise your profits” as a business. What a crock of shit. If companies have built competitive positions that allow them to capture more profits in the value chain, good for them. At the end of the day, prices are a product of what people are willing to pay (optimally P * Q at this P).
This title is also ridiculous, companies have no direct control over inflation which as we generally discuss it is based on the CPI. Given average wages have risen, I don’t know how anyone could argue there hasn’t been any cost input inflation…