Corporations are motivated by profit, why would they not raise prices to reflect demand?
If 100 people showed up to some guy’s hot dog stand and he periodically ran out of hot dogs everyday/had so many people in line that people didn’t even line up, he’d make more money if he raised prices until he stopped running out of hotdogs or had shorter lines. That’s because his hot dogs were mispriced relative to demand: at that price quantity demanded exceeded quantity supplied. If I were that hot dog guy I’d feel no guilt in raising the prices of my hot dogs 20% so I could make more money. Corporations work exactly the same way.
I agree with this in principle. In reality, these grocers have been caught fixing bread prices[0] and not a single person has gone to jail. The dairy industry is also a cartel. Of course, they can keep doing this because the government is in bed with these corporations, and so we come full circle to bad policies.
That’s a fair point. Collusion and price fixing should be prosecuted and investigated to the fullest extent since it harms the general public so much. What I am describing would apply absent of collusion though - collusion is not necessary for this to occur
If 100 people showed up to some guy’s hot dog stand and he periodically ran out of hot dogs everyday/had so many people in line that people didn’t even line up, he’d make more money if he raised prices until he stopped running out of hotdogs or had shorter lines. That’s because his hot dogs were mispriced relative to demand: at that price quantity demanded exceeded quantity supplied. If I were that hot dog guy I’d feel no guilt in raising the prices of my hot dogs 20% so I could make more money. Corporations work exactly the same way.