"Mr. Kumar said he was contemplating checking with a lawyer to see if there might be a city law that somehow prohibits a business from selling pizza at outlandishly cheap prices."
He was indeed in favor of free markets. However, your statement is factually wrong on two counts.
1) He was in favor of some government action, most notably monetary policy.[0]
2) His arguments were consequentialist and had little to do with morality. For instance, he once described Ayn Rand as "an utterly intolerant and dogmatic person who did a great deal of good.".[1]
> 1) He was in favor of some government action, most notably monetary policy.[0]
Not really, he actually was in favor of privately issued competing currencies, but he was a realist and realized this was not politically possible, so he advocated monetary policies that did the least harm given the current system.
But always stressed he didn't believe all government actions were evil, he thought national defense and law enforcement for example were best accomplished by government.
On the other hand his son David Friedman is a well known anarcho-capitalist that considered the privatization of all government functions.
That's not exactly fair of Friedman; though he was definitely pretty conservative in his views, he was overall quite the empiricist and not much a radical ideologue.
There are numerous instances of him thinking government action is a good idea. For instance, back in the 90s he argued that the ideal health care policy would be one "with a requirement that every U.S. family unit have a major medical insurance policy," instituted by the federal government (in place of Medicare).
Friedman was not a conservative, he was a liberal (in the original sense of the word, and the sense still used everywhere outside the US): http://www.youtube.com/watch?v=ZNc2vzVsIM4
The quote from 2 bros "We have enough power to wait them out. They’re not going to make a fool of us." when they have 11 other stores charging a higher rate to make up for the loss of this one that's fighting with another store makes this seem like textbook predatory pricing, which is illegal, for very good reasons.
"But 2 Bros. has a security camera. Winding back to the night in question, the night of the sudden 21-cent price drop, a manager found frames that showed the front of the two stores. And there it was: Bombay/6 Ave. Pizza’s 79-cent sign when 2 Bros. was at $1. Mr. Patel and Mr. Kumar had made the first move."
No, it's because it's a common monopoly building tactic which is bad for the economy.
It's because a larger and/or diversified business can mercilessly destroy all competition in a market by selling under cost and offsetting their losses with price hikes in areas where they face no competition until the competition in the new area gets wiped out from having to sell at or below cost. Once the new area is secure, the predatory company can then charge monopoly prices in that area as well and move on to sweeping a new area. Historically this was a common business tactic and was used to create some fairly large monopolies before it was outlawed.
I guess the difference is in how you judge which of two companies is superior. I tend to think that the one that gets more/better business (from selling more, making higher margins, etc.) from voluntary customers is superior.
The whole point is that these places aren't making margins off of this, they're losing out.
You're not a better business when you purposefully place yourself next door to an existing store and use corporate weight to temporarily price your product lower than your competition can sustain before you jack it up. Noted by the "We have enough power to wait them out." comment from the Two Bros guy.
The better business here is the Joey Pepperoni's whose owner refused to drop his price below his profit margin, but his business is likely relying more on long-term customers than it should have to because two business owners are being stupid, and one is being predatory.
The point here is that Walmart opening next door to your current grocery store, and pricing everything at a loss for 12 months to run the incumbent out of business and then price hiking everything over what the incumbent used to charge, doesn't make them the better business. It means they're the worse business because they're bad for the economy, bad for the community and bad for future business. Why? Because no store could open and survive next to a walmart if they were allowed to predatory price.
Certainly, if you define 'superior' as whoever gets the most sales regardless of the utility produced, then there is nothing to debate.
The argument against this is that certain tactics (such as predatory pricing) for achieving this are designed to produce a monopoly, and a monopoly results in higher prices and lower utility than a competitive market.
The quality of the two companies is irrelevant - the point is to avoid having well funded companies invade and monopolize markets, and then using their monopoly to hike prices above where they were before they arrived and milk the area.
Its only if you don't take the time to think about it for a minute. After thinking about it, I may become more reasonable. Especially in food, too cheap prices are not a good idea, because they will cause all kinds of problems, especially with quality, and may cost society a lot of money in the long run. "Free market" might be a nice marketing slogan, but it world "ain't that easy".
Well it's somewhere between predatory pricing (essentially overcapitalist ... as kalleboo mentioned) and socialistic. This is one of the cases where a larger player is trying to push a smaller player out of the market via taking a loss on lower prices at a certain location. I do realize this can be an anti-competitive tactic ... however, bringing government into the mix is a very scary proposition. It's one of the aspects of a capitalistic society that's always a damned if you do, damned if you don't proposition. There is no perfect solution to the problem and as a whole it's sickening.