Maybe my example wasn’t clear; I don’t mean that you would buy a microwave if you already have one, I mean that you will spend your money on something else if you can’t afford the washing machine. Some goods are tightly correlated with each other such that if the price of one goes up (e.g. due to tariff), the price of the other will go up as well because it’s a partial alternative.
The type of market you’re describing…only happens in small, locally focused markets
This is not true; supply and demand applies in any open market, with the exception of monopolies and collusion which I already pointed out. Yes, WalMart/Home Depot/etc engage in anti-competitive business practices, but they still can’t arbitrarily charge whatever they want, which is what it sounds like the Axios article is saying. If they could, then why did they wait for the looming threat of tariffs to raise their prices? Why haven’t they been charging exorbitant prices all along?
If I need an air conditioner, I’m going to buy an air conditioner because I need one, whether it’s $100 or $300. If I need a new exhaust to get my car to pass inspection, I literally need to pay whatever it costs unless it’s so expensive that it would be cheaper to buy a new car (which, considering that all cars have exhaust, is unlikely).
This model of economics is complete fiction when it comes to essentials. If you’re talking about optional purchases? Yeah, maybe. But when you’re talking about things people actually need? That’s not how it works.
Otherwise we’d all have stopped paying exorbitant rents a decade ago. But we can’t, because people need homes.
Competition may prevent companies from charging completely arbitrary amounts for everything, but if the only control is being somewhat close to what other companies charge that means the price is going to gradually rise. In a world where corporations are expected to increase their profits every quarter, the entire market is incentivized to continually hike their prices with the cooperation of the rest of the market. They all just have to decide they want more money. It’s a death spiral.
Maybe my example wasn’t clear; I don’t mean that you would buy a microwave if you already have one, I mean that you will spend your money on something else if you can’t afford the washing machine. Some goods are tightly correlated with each other such that if the price of one goes up (e.g. due to tariff), the price of the other will go up as well because it’s a partial alternative.
This is not true; supply and demand applies in any open market, with the exception of monopolies and collusion which I already pointed out. Yes, WalMart/Home Depot/etc engage in anti-competitive business practices, but they still can’t arbitrarily charge whatever they want, which is what it sounds like the Axios article is saying. If they could, then why did they wait for the looming threat of tariffs to raise their prices? Why haven’t they been charging exorbitant prices all along?
If I need an air conditioner, I’m going to buy an air conditioner because I need one, whether it’s $100 or $300. If I need a new exhaust to get my car to pass inspection, I literally need to pay whatever it costs unless it’s so expensive that it would be cheaper to buy a new car (which, considering that all cars have exhaust, is unlikely).
This model of economics is complete fiction when it comes to essentials. If you’re talking about optional purchases? Yeah, maybe. But when you’re talking about things people actually need? That’s not how it works.
Otherwise we’d all have stopped paying exorbitant rents a decade ago. But we can’t, because people need homes.
Competition may prevent companies from charging completely arbitrary amounts for everything, but if the only control is being somewhat close to what other companies charge that means the price is going to gradually rise. In a world where corporations are expected to increase their profits every quarter, the entire market is incentivized to continually hike their prices with the cooperation of the rest of the market. They all just have to decide they want more money. It’s a death spiral.