it's the kind of elementary mistake in basic economic theory that is rampant amongst stupid conservatives but that liberals just have not made in this country for decades.
what the fuck are you talking about? oligowhatchamasay? i'm talking about competition!
right.
what is an oligopoly?
“A rule of thumb is that an oligopoly exists when the top five firms in the market account for more than 60% of total market sales,”
Characteristics of oligopolies
editSome characteristics of oligopolies include:
- Profit maximisation
- Price setting: Firms in an oligopoly market structure tend to set prices rather than adopt them.[22]
- High barriers to entry and exit:[23] Important barriers include government licenses, economies of scale, patents, access to expensive and complex technology, and strategic actions by incumbent firms designed to discourage or destroy nascent firms. Additional sources of barriers to entry often result from government regulation favouring existing firms.[24]
- Few firms in the market: When there are few firms in the market, the actions of one firm can influence the actions of the others.[25]
- Abnormal long-run profits: High barriers of entry prevent sideline firms from entering the market to capture excess profits. If the firms are colluding in the oligopoly, they can set the price at a high profit-maximising level.
- Perfect and imperfect knowledge: Oligopolies have perfect knowledge of their own cost and demand functions, but their inter-firm information may be incomplete. If firms in an oligopoly collude, information between firms then may become perfect. Buyers, however, only have imperfect knowledge as to price,[23] cost, and product quality.
- Interdependence: A distinctive feature of oligopolies is interdependence.[26] Oligopolistic firms must take into consideration the possible reactions of all competing firms and the firms' countermoves.[27] Every oligopolistic company with strong commodity homogeneity in its industry is reluctant to raise or lower prices, as competing firms will be aware of a firm's market actions and will respond appropriately. Anticipation among firms about potential counteractions leads to price rigidity, with firms usually only willing to adjust prices and quantities of output in accordance with a price leader.[28][29] This high degree of interdependence stands in contrast with the lack of interdependence in other market structures. In a perfectly competitive market, there is zero interdependence because no firm is large enough to affect market prices. In a monopoly, there are no competitors to be concerned about. In a monopolistically-competitive market, each firm's effects on market conditions are so negligible that they can be safely ignored by competitors.
- Non-price competition: Generally, the oligopolistic enterprise with the largest scale and lowest cost will become the price setter in this market. The price set by it will maximise its own interests, such that other small-scale enterprises may also benefit.[30] Oligopolies tend to compete on terms other than price, as non-price competition, such as promotional efforts, is less risky. Along non-price dimensions, collusion is harder to sustain.[31]
so how do you get grocery prices down via competition, then?
you don't. you're stupid.
you need to reduce input costs, which in most cases, in canada, has to do with high transportation costs. further, the cost of fertilizer has been spiraling out of control for years.