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Originally Posted by Cube Inmate
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Good points all. I agree, and thing you local Tim's better stock up on their pennies
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What sets the profit percentage? A truckload of stuff. There a couple of main ones I can think of; because each gas station sets it own prices, there can be a local monopoly or oligopoly set up. Look at smaller towns - they don't have a large number of stations (and can't support a large number), so there isn't as much competitive pressure, and their gasoline is generally a bit more than it shoudl be otherwise. So they will be getting more than 2%. Another major thing are barriers to entry. Competitive theory states that if someone can enter the market and make a profit, they will, and they will continue to enter the market unti profit reaches 0. However, the cost to enter the market must be considered, and if that cost cannot be recouped in a reasonable timespan, they won't enter the market. So the people already in the market can raise the prices (and profit) just up to the point before it becomes attractive to draw other competitors.
I'm guessing it will take a year to 18 months at least before all the GST change is noticed. Some small businesses on file their GST returns on an annual basis, so they won't see the full effect until their first full year with the new rate.
And I concede your point about the places that include GST in their posted prices. Peter's isn't going to redo their menu because the GST dropped a percent. Then again, I doubt many people are going to adjust their spending habits on small amounts in the short term (would you change your mind about going to Peter's because of 10 cents per dollar?). In the long run though, I'd bet the next price increase by any of these "tax included" places would gradually remove any "windfall" they may experience in the short term.
And although I work in IT now, I am class of '92 B.A. Hons Econ (but there has been 14 years pass by since I had to know quasi-concave analysis in advanced micro-economics).
Anyways, enough rambling. And volatile markets would be nasty to study. I doubt you could trust any short term results.