this post was submitted on 21 Aug 2023
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It's called Free Market Capitalism. If the market can bear double the cost, the prices will rise to meet the level the market can bear.
I see you got as far as supply and demand in your economics course before you zoned out. Competition specifically 3 competitors has been shown to apply sufficient pressure to stop price gouging. Airlines profit margins are at 8% which indicates sufficient completion.
Too bad the regulations to support competition and disband oligarchies is so pathetically weak.
Incidentally, why is it that every gas station in town can fix their prices together? Isn't price fixing supposed to be illegal?
There is not sufficient regulation to support the hypothesis of competition.
8% profit margin? That's... Absolutely abysmal. How the heck do they stay afloat?
Not sure if you are being sarcastic and think 8% is huge or you are being sincere and think 8% is poor. 8% is average compared to other industries.
8% is tiny. Like, microscopic.
In my industry, if your Profit Margin per ticket is less than 70% for a long enough time, your gonna go under. (Automotive Repair)
I doubt your profit margin per ticket includes over head costs. Is sounds like it's mostly direct costs that are included. If your shop truly had a 70% profit margin the owner would be loaded, for every 100k you charge customers they would be taking home 70k in profit.
And free market capitalism also supports competition - if there's a company that can do it for less, there will be, because people will spend less if they can.
It works both ways mate