If cartel-like behaviour is an emergent property of an ordinary market, how should it be controlled, regulated and punished?
Why punish it? By this reasoning, all you need to do is to give buyers better information so they can react faster.
The problem with gas prices, I suppose, is that you have to drive around to collect them, and once you come to a station, if you decide its price is unacceptable there's a cost to checking out the next one (the time it takes you to drive there).
Seems like there could be a mobile app that tells drivers the gas prices at stations in their vicinity, which, according to the article, should change the system's behavior mode to push prices down instead of up.
Better information does not necessarily allow faster reaction. It could lead to information overload. In general, I think the problem of how to improve buyer reaction times in a market is going to be a lot harder than "give them more/better information" (although simply providing more/better information may indeed be the solution for some markets).
Also, that mobile app (or several) exists. But they rely on users reporting the data, so there are significant network effects -- the more people use it, the more timely and useful the data becomes.
Well, I imagine the logic is simple: a cartel--even if it is not the result of collusion--undermines the market (to some extent). Therefore, it is in the interest of a fair market to disincentivize it in some way. It doesn't have to be punishment per se, but some way of trying to limit cartels would be good.
I thought that cartel implies that sellers collude to artificially raise prices and limit competition. If this is the natural result of a free market, it seems that it is therefore not a cartel, just that given competitor price information, when the seller reacts first the low-priced sellers are likely to raise their prices (get more profit when the buyers come) rather than the high-priced sellers lowering their prices (gain customers from other sellers) which happens when buyers react first.
It is an interesting observation/model but calling it a cartel is a little bit over the top. The good/service reaches its market price regardless of whether it gets there from lower or higher prices.
You're falling into the trap of worshipping emergent outcomes like they're a golden calf or something.
We like free-market economics because they get good results. If there's a market failure and the standard free-market economics aren't applying, like in the case of a cartel, then that's bad and we want to change it. Bad results are bad, good results are good.
> If there's a market failure and the standard free-market economics aren't applying, like in the case of a cartel, then that's bad and we want to change it. Bad results are bad, good results are good.
It must be nice to live in a world without regulatory capture.
"Want to change" doesn't imply "will do less harm than good" in this world. In fact, "want to do good" is pretty much the basis of all of the really huge problems we have.
It must be really great to live in a world where you can impute arguments to other people - guaranteed correctness, without any hassle!
Since you didn't make an argument I won't do the same disservice to you. The relevant laws in this case are anti-trust. I support them, generally, as did TR who introduced them. Regulatory capture is a problem to be battled, not a reason to throw your hands up and say "oh well, guess i'll just let myself get screwed by a couple people who managed to lock up an industry through collusion".
The issue with "cartel-like" price is that it is not the perfectly competitive price, and the perfectly competitive price is the most efficient price - the perfectly competitive price is, in the absence of externalities, the one that brings about the most benefit (by equally aggregated utility) to society as a whole.
The significance is because of the loss of efficiency, not because of the name/label given, or how the price is determined.
Why punish it? By this reasoning, all you need to do is to give buyers better information so they can react faster.
The problem with gas prices, I suppose, is that you have to drive around to collect them, and once you come to a station, if you decide its price is unacceptable there's a cost to checking out the next one (the time it takes you to drive there).
Seems like there could be a mobile app that tells drivers the gas prices at stations in their vicinity, which, according to the article, should change the system's behavior mode to push prices down instead of up.