quote:Originally posted by T S C:
Led by the media? Hardly.
I am trained in the study of economics. The article features quotes by several prominent economists. The study of economics is the study of market forces. Market forces drive price. If you stop shopping at Exxon, you will do nothing to help or hurt the price of gas. If everyone on the earth stopped shopping at Exxon, they would lower their price temporarily and then people would once again start shopping there. Other stations might follow suit, but then the prices would go right back up to where the market forces dictate.
The price of gas isn't some big top secret collusion agreement between the oil companies or the world leaders or the Red Hat Society. It is driven by the market - the same as the price of milk, Beanie Babies, washers, Happy Meals, cars, and poodles.
Perhaps you forgot a lesson.
Oligopoly
When a few FIRMS dominate a market. Often they can together behave as if they were a single MONOPOLY, perhaps by forming a CARTEL. Or they may collude informally, by preferring gentle NON-PRICE COMPETITION to a bloody PRICE war. Because what one firm can do depends on what the other firms do, the behaviour of oligopolists is hard to predict. When they do compete on price, they may produce as much and charge as little as if they were in a market with PERFECT COMPETITION. &
Collusion/Cartel
An agreement among two or more FIRMS in the same industry to co-operate in fixing PRICES and/or carving up the market and restricting the amount of OUTPUT they produce. It is particularly common when there is an OLIGOPOLY. The aim of such collusion is to increase PROFIT by reducing COMPETITION. Identifying and breaking up cartels is an important part of the competition policy overseen by ANTITRUST watchdogs in most countries, although proving the existence of a cartel is rarely easy, as firms are usually not so careless as to put agreements to collude on paper. The desire to form cartels is strong. As Adam SMITH put it, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices.”