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What do you think of Internet outrage of companies raising their prices, chiefly companies like Netflix and fast food restaurants? I think morally, it seems pretty iffy- it's a free market, and if they raise their prices, you can just stop buying what they offer. If the government got involved to set any sort of price ceiling, I think that'd definitely be a bad idea that'd lead to a shortage of some sort.
But if the outrage lets customers act as a pseudo-monopsony which gives them more power, I also don't really mind if they're able to use it to demand cheaper prices, even if I think the accusations of corporations being evil are vastly overblown. Especially when it comes to keeping the price of something like Netflix low, where much of their value comes from having exclusive rights to stream old shows and movies instead of all revenue to them going towards making new stuff or improving technology. If consumer outrage keeps the Netflix price $5 cheaper than it otherwise would be, is anything hurt besides shareholder bank accounts?
Large companies have zero incentive to reduce prices when they know that their competitor will do the same. McDonald’s has actually sued 12 of the major national meat suppliers for price-fixing simply based on the fact that each supplier knew the others’ pricing due to a shared analytic tool. All it takes is one reasonably intelligent analyst at the meat supplier board room to ask “so what happens if we lower our prices” for all to realize it’s an unprofitable move.
https://www.fooddive.com/news/mcdonalds-sues-meat-companies-pork-price-fixing/637572/
https://www.atg.wa.gov/news/news-releases/ag-ferguson-s-price-fixing-lawsuit-nets-105-million-washingtonians-tyson-foods
https://www.agriculturedive.com/news/agri-stats-sued-by-DOJ-for-role-in-meatpacking-antitrust-scheme/695196/
If you are McDonald’s and there’s a Wendy’s across the street, you have two options. You can both keep your prices high and split the pool of consumers 50/50, knowing that stressed American consumers will continue to buy your slop because it is time-efficient and they have formed a habit to your addictive slop. Or you can lower your prices, which the competitor will do next week, which leaves you back to the first option only with less profit. Of course they don’t do this. But if a brand new competitor moves in who doesn’t play ball, perhaps they will do this to squeeze him out — no new competitor can compete with the supply chain and the institutional knowledge of McDonald’s.
It’s an entrenched mythology of capitalism that companies lower prices based on competition. This hardly ever works in the real world. There’s no reason, for instance, for OnlyFans to rake in billions of dollars when anyone can create a similar site. But OnlyFans isn’t profitable because their service is better, but because the pornographer who operated it made the site a meme among the public (a kind of psychological rentseeking), because he had the previous institutional knowledge and capital to do this. And you see with car dealerships, there’s no reason for any used car dealership owner to make tens of millions. But in an intensive competition what they do is compete over psychologically manipulating the vulnerable, so the car dealerships compete over misleading pricing plans, overpriced itemization that the customer doesn’t have the knowledge to dispute, etc. It is horrifically inefficient and immoral as a system and it is only maintained due to various mythologies in the public imagination.
I'm pretty sure demand for fast food is much more elastic than you're suggesting. You can't use misanthropy as an excuse for ignoring the fact that consumers do respond to higher prices and firms respond by lowering them.
Why are you quoting me McDonald’s PR as if it means something? Are you going to quote me Wendy’s selling $1 burgers next, after their PR disaster of announcing a plan to do surge pricing?
They may as well continue doing this cycle, raising then lowering when publicity gets bad / people notice.
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