posted ago by defiant_liberty ago by defiant_liberty +10 / -1

So I work in an area closely related to the wholesale industry and when the pandemic hit, I expected the factories and wholesalers to massively increase prices on face masks and wipes and such. Well, they did, but they didn't.

Maybe 20-30% per quarter, which is high, but they could have easily increased them 500% to 1000%.

Then it hit me. Many of these factories have close relationships with their wholesalers, and wholesalers close relationships with the retail stores. They negotiate in long term pricing, and they don't want to screw it up. If they massively increased prices to balance out supply and demand, it would kick the door wide open for competitors to jump into the market and undercut them.

The reason they hate price gougers, has nothing to do with them making a massive profit, and everything to do with competitors having a chance to get their foot in the door to compete with them and create new distribution channels. These large companies hate and despise competition, and for the most part can keep it in check by keeping profit margins thin. But occasionally, crazy events come along and threaten to turn over the apple cart.

In sum, I learned that the media hatred of price gouging isn't about greedy sellers, but about large greedy corporations wanting to cling on to distribution and supply monopolies.