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by wcarss
1322 days ago
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It wasn't said that corporations were good but now are not, and it is not a requirement for the above to be relevant or true. The theory is that corporations will price at the highest price the market will bear and know that price from price tests they are willing to perform. "Inflation in the air" gave them all an impetus to more aggressively explore the space of prices consumers would bear, and it turns out, people who eat chips mostly won't stop buying them when they're 1.5x the price and the packaged weight is cut by 25% over a 2 year period -- and the same follows for a huge number of similar goods. This is an acceleration of processes that were already under way, but it's also likely enabled by, likely not directly caused by, and likely feeding into "inflation", and it's likely not something that rate changes will directly impact -- though, maybe a second order change, e.g. a crash to the economy, could hurt workers to such a degree that they simply cannot possibly both buy chips and live. That might finally curb price hikes and would indirectly have fought inflation. |
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Your theory around sticky prices doesn't explain firms running out of things despite keeping increasing inventory.
Certainly, prices can be sticky and may be less sticky during the pandemic but firms still have to compete with each other on cost.