Economics Questions

Re: Price Fixing and Cartels

Don Roberto — Sun, 25 Jan 2009 21:45:31 GMT

In Estonia two construction companies recently made similar bids for a public roadbuilding contract. As it turned out they had agreed to work on it together if either one of them won the contract. When it came out one company was charged for creating a cartel (the other confessed that they agreed to cooperate). The laughable thing about it is that they did it 'cause they weren't very big companies and wanted to keep the costs down. Now the result was that after the elimination of this 'evil' cartel the contract was given to the presenter of a more expensive bid.

Re: Price Fixing and Cartels

nazgulnarsil — Sun, 25 Jan 2009 21:03:35 GMT

I'm getting more and more resentful of the keynesian assholes who point to crazy hypothetical scenarios with no historical precedent and implying that they're somehow worse than the actual real life repeated problems that their school of thought has caused.

Re: Price Fixing and Cartels

Scott Jefferies — Sun, 25 Jan 2009 18:41:47 GMT

always nice to see people puttin the austrian school out there now, even in bad light i guess.

Re: Price Fixing and Cartels

Jon Irenicus — Sun, 25 Jan 2009 18:30:52 GMT

Is that sincerely the best they can do? Point to a cartel greatly assisted by governments? And assert that Mises was wrong? Wow, brilliant reasoning there. Pathetic as ever.

Re: Price Fixing and Cartels

krazy kaju — Sun, 25 Jan 2009 17:06:53 GMT

Conza88:

"The IPA presented six cases to show cartels' "inherent instability". It shot its own foot off with the very first case: diamonds. Yes, the cartel broke up eventually, but it lasted longer than three score and 10. Citizens being ripped off want solutions before they die."

Caveat Emptor. Don't like the price, don't buy diamonds. Higher the price, more incentive to enter the market, competition. Or buy opals, or sapphire, substitutes. But regardless, the market answered! They can chemically make diamonds that are exactly like the real thing... hehe.

The diamond cartel is held up by African governments which promote cartel-ism in hope of capturing part of the profits from diamonds. Look at the parternships De Beers has: link.

Also, De Beers is no longer considered a monopoly: link.

Re: Price Fixing and Cartels

krazy kaju — Sun, 25 Jan 2009 16:55:43 GMT

A cartel or monopoly exists.

The cartel/monopoly raises price and/or reduces quality at the expense of the consumer.

∴ It is profitable for entrepreneurs to enter the market and compete with the cartel/monopoly and to provide better services to consumers.

Price Fixing and Cartels

Conza88 — Sun, 25 Jan 2009 16:47:55 GMT

I was wondering if I could get some responses or a critique of this article?

"Its case against anti-cartel action rests on three premises: that cartels are not very effective in raising price or sustaining themselves; that some cartels are good; and that anti-cartel action is ineffective and/or counterproductive."

"Keynes once said that we're usually slaves to some defunct economist. The IPA's is Ludwig von Mises -- now long dead but once leader of the "Austrian" school of economics. All three premises are Mises' decrees -- and false."

And here is the report that is being discussed/attacked.

Thanks!

Edit: My initial response was:

"government should play a key role in facilitating market competition."

Lol, how? Anti-trust legislation? Government - facilitating the market, now that's laughable.

Anti-Trust and Monopoly (with Ron Paul)

"The IPA presented six cases to show cartels' "inherent instability". It shot its own foot off with the very first case: diamonds. Yes, the cartel broke up eventually, but it lasted longer than three score and 10. Citizens being ripped off want solutions before they die."

Caveat Emptor. Don't like the price, don't buy diamonds. Higher the price, more incentive to enter the market, competition. Or buy opals, or sapphire, substitutes. But regardless, the market answered! They can chemically make diamonds that are exactly like the real thing... hehe.

Is that it, or is there more that can be improved on? Cheers