Keeping the Hand Invisible
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by Professor Evil
At the moment, a debate is raging over the prices of grain. The British Food Foundation is selling grain at the low-low price of 0.37 GBP, much below the usual minimum rate. The company has been attacked for trying to provoke a price war at the expense of the economy by another company, True Blue Food. They and others want to force the BFF to raise their prices and prevent a market collapse.
Firstly, what right does any company have to dictate another's price? Supply and demand works in that if any seller values their products too low or too high, the market will act itself and they will become bankrupt. The BFF are no exception; if they continue to sell below market price and at less than their production costs, they won't be able to pay their staff and will be forced to close. This decline, some argue, will have disasterous consequences for the grain market in general.
The Libertarian Voice's viewpoint is, so what if it does? A stable economy is one free of constraints. Because that is exactly what the Powers that Be will have to do if they want to step in, set some sort of minimum price all market sellers have to comply to. The market is a competitive field, it can't stifle itself just to provide a safety net for traders not able to compete. Let the market do its work, and the BFF will destory itself. And if it doesn't? Perhaps the average buyer is trying to say something.
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Seen as how you have only been here 12 days you may be forgiven in thinking that a total free market is the way but it isn't. The last time the food market nearly collapsed it was awful unemployment through the roof. An economy is better off with a little company co-operation and good community spirit, see PCP.
Firstly, what right does any company have to dictate another's price? by lowering their prices bff are dictating other company's prices
sorry quotation marks are needed there
That's a good point, but setting other company's prices via your own is working through the market. I'm more referring to trying to force them to change via influence and ganging up.
"The last time the food market nearly collapsed it was awful unemployment through the roof."
Well it's true, I don't know much about that. And, obviously, community cooperation is the best outcome. But if you make it impossible for people to vary their prices from the norm, it'll be more problematic in the long term if the market gets flooded. That's just my view anyway, I'm obviously going more on RL than eRepublik economics.
i dont agree with price fixing but a price 'floor' is best
@ Richard York
eRupublik economics is always somewhat "special" because the production formulas just don't accurately define what actually occurs IRL. I also don't think there is much of a worry for market flooding. Companies that survive for any length of time figure out pretty fast what the demand for their product is, and the demand doesn't really change that much. As people move up, and want better products, people already buying better products go inactive, due to any number of causes. It's pretty balanced, to my knowledge.