Archive for the ‘Free Market Competition’ tag
Airline Price Fixing Scheme Crashes and Burns
Airlines fined for violating anti-trust laws. Who else is fixing prices?
This week, Associated Press reported Delta Air Lines was fined $38 million for price fixing. Delta, which recently merged with Northwest Airlines, met with other airline companies in Japan from 2004 to 2006 to set prices for air cargo business. Why does this matter?
Markets only work when companies are free to compete. The problem is, for the companies themselves, competition can be tough. It’s hard work. Here’s the ‘Lectric Law Library
In a freely competitive market, each competing business generally will try to attract consumers by cutting its prices and increasing the quality of its product or services. Competition and the profit opportunities it brings also stimulate businesses to find new, innovative and more efficient methods of production.
Consumers benefit from competition through lower prices, better products and services. Inefficient firms or companies that fail to understand or react to consumer needs may soon find themselves losing out in the competitive battle.
When competitors agree to fix prices, rig bids, or allocate customers, consumers lose the benefits of competition. The prices that result when competitors agree in these ways are artificially high; such prices do not accurately reflect cost and therefore distort the allocation of society’s resources. The result is a loss not only to U.S. consumers and taxpayers, but also the U.S. economy.
When we ask for clean energy, we’re told it costs too much. When we ask for universal health care, we’re told the nation can’t afford it. When we ask for food to be grown organically and sustainably, for livestock to be raised in humane conditions, we’re told it will cost too much. Schools go without needed updates, teachers are being laid off, because we can’t afford any more school expenses. We’re “taxed enough, already,” according to the TEA Party mantra.
Why can’t we afford the things that would make this a better country? Why can’t we find the money? Who else besides the airlines are ripping us off?
