Don’t worry, my Econ 101 class states that surely a competitor will come in and operate at a lower cost to recoup that cost for the customers!
Wait… what do you mean the competitors are all increasing prices by the same amount knowing demand for diapers is inelastic and the Nash equilibrium is for them to all match price increases so that they all make more money together?
Surely a new entrant will help!
Wait… what do you mean nobody will invest in a new competitor because the market is “saturated” and even if they did the big brands would just decrease prices in the areas they operate until they run out of cash and fold?
Surely a regulator will help!
Wait… what do you mean the regulators feel price increases are due to “too much demand”
for products and are turning the screws on consumers?
Don’t worry, my Econ 101 class states that surely a competitor will come in and operate at a lower cost to recoup that cost for the customers!
Wait… what do you mean the competitors are all increasing prices by the same amount knowing demand for diapers is inelastic and the Nash equilibrium is for them to all match price increases so that they all make more money together?
Surely a new entrant will help!
Wait… what do you mean nobody will invest in a new competitor because the market is “saturated” and even if they did the big brands would just decrease prices in the areas they operate until they run out of cash and fold?
Surely a regulator will help!
Wait… what do you mean the regulators feel price increases are due to “too much demand” for products and are turning the screws on consumers?