Originally Posted by
Seran
Welcome to why it is a myth that supply is purely producers side and artificial, and demand is entirely exploitative. Corporations are out to make money, consumers are out to get the best price that is possible for a given product or service, and the government exists to product the consumer from anti-competitive actions. Supply and demand can more accurately be portrayed in a predator and prey relationship; when there is ample demand (prey available), businesses (predators) grow fat and prosperous until they've destroyed a market, whereupon they are consumed by a surviving business which makes for further exploitation by lack of competition.
Actually, the government regulating against anti-competitive practices, investigating price collusion, and dissolving monopolies fits into our analogy as the hunter bagging themselves a trophy predator.
In a healthy market where there is competition, prices and the quality of goods are forced to be advantageous to consumers. In the present day market where select industries are controlled by entities controlling 20% or more of an industry which in turn uses 'trade associations' to regulate competition, business artificially create scarcity as an excuse to drive up prices and therefore there profits. An anti-competitive practice.
In the article I quoted, the economist correctly points out that businesses don't pass along savings to consumers in direct contradiction to the macro-economic impact in favor of their own success. This is the textbook of artificial inflation.
Look at the present day merger of Kroger and Albertsons. They are arguing that they must be allowed to merge (and thus decrease market competition saturation) in order to compete with companies like Walmart and Costco. What they're fighting against is the reality that their already too-high prices have caused a sharp decrease in their sales and allowed Walmart and Costco, who are perfectly content to exist on smaller profit margins mind you, to grow massively successful as a result.