Quote:
Originally Posted by Bobblehead
In a competitive market companies can't gouge unless there is collusion - if they raise by 2% and their competition only raises the .5% then they will be 1.5% more expensive and lose customers to the cheaper alternative. If it is a monopolistic situation then they will do what is best for their bottom line (MR=MC)
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Of course they can gouge without collusion. All that needs to happen is one company raises prices and the rest follow suit. No collusion, yet higher prices.