68 sats \ 7 replies \ @kepford 19 Aug \ parent \ on: Grocery Store Price Gouging? econ
Here's the issue with that perspective. IF the producers / distributors for meat and poultry were "gouging" the only way that would work in a free market would be if they had a cartel or monopoly.
Funny think about that. That is a massive problem in the US. Most of the meat is controlled by a few companies. The solution isn't to invoke price controls because that wouldn't fix the deeper issue. Cartels.
Texas Slim at the Beef Initiative has been talking about the problem of meat centralization for a long time. The FDA is a massive reason for this. Its the same old story we hear over an over. Government regulatory agency makes it harder for upstarts to enter a market. Existing entities support politicians that increase regulation creating a regulatory moat.
The good news is that there are meat producers fighting back. Trying to build new circular economies. Selling direct and cutting out these multi-national meat distributors.
The other thing I've heard is that most of the meat we see in grocery stores comes from outside the US. The US meat is exported because it can bring higher profits outside the US.
Are four producers few enough for a cartel?
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Not sure the number matters that much.
At least based on Wikipedia's blerb on it. And this aligns with what I think of with a cartel.
A cartel is a group of independent market participants who collude with each other as well as agreeing not to compete with each other in order to improve their profits and dominate the market. A cartel is an organization formed by producers to limit competition and increase prices by creating artificial shortages through low production quotas, stockpiling, and marketing quotas.
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my point is less competition leads to collaboration, whether or not a formal cartel is formed. A natural, informal organization forms due to game theory.
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I've done some work on related topics. While it's certainly true that concentration is increasing throughout the ag sector, the general view seems to be that there is not much evidence to support monopoly pricing.
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How would the general view know? In most collusion cases we find out after someone blows a whistle or takes an offer in a case.
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This is from people studying the price trends of outputs compared to those of inputs. If some sort of oligopolistic pricing is happening you'd expect to observe price trends of outputs change as concentration increases.
I'm not vouching for their methods or conclusions. That's just some context that I happen to have access to.
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this is what I'm trying to say, I think.
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