I'm sure there is a theory of how this would reduce prices - what is it? Real estate markets became infinitely more transparent over the last couple of years, to the extent that the data is used to train data scientist. The result? Speculators entered the market at it's messed up.
Is speculation as much of a concern for groceries? Real estate is an asset you can hold onto for a while, but I feel like buying up groceries just means you'll have a lot of expired food pretty soon if you can't find a buyer.
This seems vaguely familiar now that I look at it, I must have read it (or an article on a similar phenomenon). Fair enough though, I'd be fine with a regulation like this along with stopping price collusion.
That's not how that worked - real estate data was always fairly public and if you had enough money it was straightforward to hoover it up - the change in approach was more about the last housing crisis and then ZIRP buoying huge tech and real estate interests to drive into home buying in the first place.
We had people who were underwater for years combined with a new market that cant afford the extremely high fixed costs and end up eventually paying rents higher than the mortgage in many principalities.
If you have a ton of capital it makes perfect sense to park it in a place where you have a guaranteed return.
Good point.
But is there an oligopoly in the Canadian real estate market though?
I assume the premise of Project Hammer is that transparency applied on the food industry would underline some collusion and invite for a debate on whether there's some legislation to apply against such an oligopoly.
What would demonstrate collusion? Very similar prices could be a sign of close competition, and razor-thin margins. Varying prices could also be a sign of close competition, with grocers choosing loss-leaders to lure customers into the store.
Look at the data for Austria presented in the link in the article. Supermarkets raised and lowered prices on the same day to the exact same amount and lots of other pretty damning evidence.
Supermarkets often publish upcoming sale prices in advance, and matching your competitor’s prices is not collusion. On the contrary, it’s a sign of healthy competition!
If supermarkets are getting together and forming handshake agreements like “we will not change prices between November and February”, like Canadian supermarkets apparently did, then that could constitute collusion.
Lowering prices together makes sense. But why would you raise your prices of a commodity product to match your competitor's? If they are going to raise, you hold and rake in the extra sales.
Do people really go comparison shop between stores? Like, I recognize that I'm coming from a more privileged economic position to not do so, but I still go to the cheap grocery store because it's the closest to me.
I'd imagine that even for low-income people, it's the cost/benefit of comparison shopping has been squeezed out by how much prices change on a day-to-day basis. Like sure, if you're buying a lot of something all at once it might make sense to do on that occasion, but once you do that a few times you either learn:
1. Which store usually has the lowest price (and if they have coupons for store X, they might just only go there, because... they can't use the coupon at the competitor's)
2. The difference in price doesn't offset the time-cost of going to multiple stores (and the consolidation of stores means that going to two different stores will take even more travel time).
So, if most people aren't really doing comparison shopping anyway, then you make more money by matching your prices to your competition.
Some people do, based on what I hear from my parents. It could be that seniors have more free time and are more astounded by higher food prices that the spend their time shopping at multiple supermarkets to get everything they want at low(er) cost.
Of course the time it takes to do this makes it all but impossible to actually save money, so it has to be a small portion of their customers.
I have heard that only something like 10% of customers actually give a shit about prices at all, and it is them who keep the prices in check for everyone else. i.e. with razor margins, the retailers can’t afford to lose that 10% customer base
Why are stores changing prices so frequently if it has no impact on sales?
Yes, the vast majority of people don't comparison shop. But people do decide to not buy something if it seems it is too expensive and vice versa, and the effects are seen on the statistical level.
Your past data shows you sell 100 apples every day, despite the cost. Then it shows that you may sell other 100 if the price is considered "low" by the clients or 30 if the price is "high".
Then you know how many are in stocks, from how many days, and how many are arriving.
And you fix the price accordingly
It's pretty easy for things to not be actual collusion to end up looking like it, and having the very same negative effects" You don't need handshakes in backrooms.
This will be even more popular in situations like supermarkets, where a significant part of the stock has an expiration date that isn't so far from today. Turning your inventory too fast is just as bad as turning it too slowly, so there can be immediate reactions to make sure things are being consumed at just the right speed. And the more uniform the models of consumption the supermarkets are running, the more similar their decisions will be anyway.
So I wonder if we even need to focus on needing damning evidence, or on whether there is collusion, and instead aim for what we want: Dynamics that put negative pressures on prices. If we aren't seeing that, I don't care much about how much is collusion, and how much is models that have tacit agreements because, as market players optimize for what is best for them, there are solutions where high prices across the board makes all sellers win.
Those instances do look suspicious, though it’s likely that both vendors were sourcing from the same supplier and/or one was matching their competitor’s pricing. I’d be interested to see what proportion of the own-brand goods this had happened for, whether the same store was always first to raise prices, and what their supply chains looked like.
I’d be curious to hear more from OP on this as well. I’ve got my own price tracking site for Canadian groceries (http://grocerytracker.ca/) but my primary goal has been to get information in the hands of average Canadians so they can make informed buying decisions.
>The result? Speculators entered the market at it's messed up.
That seems like a stretch. What's the casual mechanism behind increased accessibility of data driving up prices? At least with something like stocks you could blame HFT firms piling into the market or whatever. It seems far more plausible that prices rose for other reasons (take your pick of: NIMBYism, immigration, foreign investors, etc.), and the increased accessibility of data happened to coincide with the price rise (ie. similar to https://xkcd.com/925/).
Imagine we sell groceries. If I have real-time access to your prices, and you to mine, then I have no incentive to try to outbid you to my customers since you will see my cheap potato sale sooner than my customers will, and announce your own equivalent sale. Knowing you have access to my prices, I can also increase them safe in the knowledge that you will follow me very soon, since that means we both win. That is how sharing prices with no friction leads to less competition.
