Just think how much easier it will be to shop when a product's the same price everywhere! No more pesky comparison shopping!
Antitrust and other consumerist policies would appear to be under threat of revision or even elimination given the libertarian threat of the current Supreme Court. Laws against price-fixing were some of the more lasting legacies of the Progressive Era, dating back to before the days of Teddy Roosevelt. The current Court tends toward the "Chicago school" of economics, which emphasizes a laissez-faire approach toward big business.
The net effect of this will be about zero anyway, since the "price fixing" that was previously illegal was almost universally unpreventable.
Interesting comments, CD. The area is rather technical since it involves a number of unusual concepts -- horizontal and vertical integration, economic efficiency, market power, and so forth. It pays to be an economist if one wishes to understand it fully. It is my impression that while antitrust law sometimes varied in efficacy, it was largely successful in a number of respects. A preference for breaking up monopolies has reversed itself since the Reagan Administration. The most famous recent application of antitrust law was the breakup of AT&T into so-called "Baby Bells." Subsequently, the "Baby Bells" have re-formed into larger conglomerations, and some say that AT&T itself has regained much of its previous market power, albeit in a most circuitous way. Those in the computer and software fields may also recall the failure of Justice Department efforts to obtain the severe penalties it sought against Microsoft for what the government deemed its abuse of its position of dominance. (See: http://en.wikipedia.org/wiki/United_States_v._Microsoft.) Once again, at least to the outside observer, the power of corporate interests seems to have prevailed.
So...lemmee get this straight. Government was intervening in a consensual relationship between two parties? About fucking time such stupidity was abolished. And what was Justice Breyer's (oh-so-typically-in-the-statist-line) comment? Good. Maybe that will keep the Court from sticking its nose into other peoples' consenual agreements. This just goes to show that the government will zealously hang onto power even if it's of no benefit to the country.
Funny how they reveal their true agenda here - protecting businesses from competition. So for all those conservatives and libertarians who are going to call this a great victory for free enterprise, it isn't. It's a great victory for those businesses favored by this agreement - mostly, it would seem, bricks-and-mortar retailers. It will actually do severe harm to other businesses which will see their ability to compete stripped away. Another victory for big business at the expense of absolutely everyone else.
You know, I really would like to see some of the people who regularly complain about "judicial activism" start complaining about opinions like this one. Courts always have to interpret statutes in the first instance, but they never have to change statutory interpretations that have stood for 96 years. It really is the height of interventionism to overrule a case where Congress has had 96 years to say "sorry, you got it wrong" and declined to do so. This isn't like a constitutional law case where there are no easy ways for Congress to overrule the Court so that the Court has to revisit the decisions it considers wrong. It isn't like an obscure technical case where Congress may not care about the decision the Court reaches. By not acting for so long on a matter of interpretation so central to antitrust laws, Congress has told the Court that it got it right, and the Court has now ignored the clear will of Congress on a matter within Congress's power. Anyone who doesn't decry this decision has no right to ever complain about judicial activism again.
Don't celebrate yet. As far as I know, the Supreme Court has hardly abolished the requirement that companies must abide by other provisions of the antitrust law, which by their nature restrict two or more companies from entering into combinations destructive of the free market economy. As for the consensual nature of the arrangement, merely because two wolves agree to raid the chicken coop doesn't mean that they get to do it. The free market itself is more important than any agreement between any number of private parties in derogation of it.
I think you are seeing a price phenomena that is based upon something else -- transparent information. Most prices do tend to settle on a consensus point, but it is because consumers are able to know all prices at all vendors. There is no benefit to vendor A if he charges more than Vendor B, because nobody will shop at Vendor A. This is as it should be -- the market price set by what the lowest cost supplier is willing to charge. What could potentially happen now, is the price being set further up the supply chain, by an actor who straddles the entire chain at a specific point (ie the manufacturer). As consumers, we'll see little difference -- everybody charges the same price. But the market will no longer determine price. Instead it will be the supplier, with demand having little to no impact. That's the worst case scenario. Personally, I don't see that happening for the vast majority of goods because that transparency I mention above is prevalent at every level. If a manufacturer tries to fix a price, somebody else will come along to manufacture an essentially similar good to sell at a lower price.
Well put. I might add that the matter admits of an additional subtlety. It's obvious when two or more manufacture deliberate combine to control a market. There is, however, a way that manufacturers have circumvented the requirement of intent in certain applications of the antitrust laws, and that's through what is known as "conscious parallelism." Manufacturers can independently (but secretly) decide to "screw the consumer" without appearing to conspire to do so. As I recall, courts have viewed this practice with disfavor. One can see that this possibility might be opened further given an even less restrictive set of laws than in the past. See: http://en.wikipedia.org/wiki/Conscious_parallelism
I wondered if anyone else would pick up on that. Imagine the power Walmart has now. They already have the ability to dictate purchase prices to many manufacturers. Now they can tell them they won't buy unless the MSRP (or MRP now, I suppose) is no lower than Walmart's price. An internet business is no longer able to compete with Walmart. Retail is going to trump the sellers whose business model was to undercut the MSRP by a good margin.
Is this a stunning display of ignorance of the concepts of demand schedules and price elasticity of demand - that is, that a manufacturer wants the most profit, and he can often do that by lowering prices by x% if such a decrease will cause purchases to rise y%, where y>x - or simply a brain fart where you've forgotten that producers will try to maximize profits, and so the demand schedule is extremely important?
When Walmart is the only place to buy things - that is, if the manufacturer can't do better by filling every other channel - get back to me.
Actually, it's you reading out of context. I was explaining what I thought wouldn't happen. I'm shocked, shocked, I tell you, to see you jumping to conclusions about somebody's post without actually bothering to understand it.
That assumes that supply and demand are elastic. On significant occasions, they are not, and when there are effects similar to those of collusion, or where barriers to entry into the market are extremely high, allowing manufacturers to dictate prices undercuts price competition. The realm in which it is worth it to manufacturers to sell a lower number of good for a higher price is artificially inflated by the ability of the manufacturer to require a minimum price that would more than compensate for the loss in numbers sold.
Sure you can unionize. But gub'mint shouldn't keep employers from firing the lot of them if employers want to.
Yep. If a group of employees wish to band together and push for collective bargaining, they should be perfectly free to do so. But their banding together doesn't confer any extra rights on the group beyond what they each have individually. If they withhold their labor to coerce their employer, they should be subject to firing just like anyone else.
Of course, since the employer is in an inherently superior position since (1.) he's the one with the means to enable survival, and (2.) labor is fungible whereas employment is often not, this almost always results in an unfair advantage for the employer. Your solution is, "Let the Wookiee win," which much of our society rejects as a matter of fundamental fairness, with the exception of Neaderthals who promote the so-called "right to work" and other euphemistically named ideologies in defense of the corporate class. Darwinism, neo-feudalism, call it what you will: It's heartless, it's antisocial, and it promotes the interests of the powerful over those of the weak. So much for the cause of civilization over tyranny.
If you don't have the means to enable your own survival, you probably shouldn't. What's civilized about pointing a gun at someone's head and forcing them to do with their own property what YOU want?
Elastic... I do not think that word means what you think it means. There is no way in which "elastic" can be reasonably be applied to supply in this case. Perhaps you meant unfixed? In any case it's untrue. As for demand, true enough, at least if we're talking solely about the example in the price elasticity of demand part. But that's a truism - if there is elasticity, there is elasticity. I never claimed that prices wouldn't rise if demand is inelastic. To do otherwise would be irrational unless not doing so increased consumer preferences for a particular brand, say. A big-government persona such as yourself would know all about extremely high barriers to entry. After all, it's your favorite policies which create them. The channels won't go for it. If the demand is high and inelastic, if the wholesale price is low, the manufacturer would be selling direct. If the wholesale price is high, there's no incentive for channels to carry it if they can't compete on retail price at all.
Nice backpedalling. You said it could happen now, and that it was the worst case scenario. I'm saying the scenario doesn't exist.
Newsflash: the 19th Century is over. Employers pay money to employees for their labor. Period. Employers do not exist to guarantee anyone's survival: every person's well-being is his own responsibility. If a group of employees can be fired en masse without hindering the business's operation, then I submit that proves they shouldn't have any collective power to force the business to pay beyond what the market dictates. If they're easily replaced, on what basis are they entitled to more money? Certainly not by the conditions of a free market. If a business can find lots of potential employees to fill job X for $5/hour then the government shouldn't guarantee that the people that business already employs can coerce the employer into paying $10/hour. That wrecks companies. If you don't believe it, look at the ruins of the American auto industry. Or anywhere else unions exert their stagnating influence. Oh, for fuck's sake. Take a look at who's unionized in this country right now. The biggest portion is PUBLIC EMPLOYEES, people who are in no danger whatsoever of being exploited or undercompensated. Anti-Marxism? It's rational, it's consistent with individual freedom, and it promotes greater prosperity for all. Meanwhile, we all get richer and live longer as your kind of thinking is gradually discarded by people who've seen its failings in the real world.
Get rid of the Supreme Court since it's a statist instutitution and never cares about the average person's rights.
It actually happened to a manufacturer we used to carry at my job (before my time). Walmart has huge power over small and niche manufacturers. It even has power over the big producers (just look how CDs are censored to meet Walmart standards). We're talking about a retail presence in nearly every corner of America, after all.