Monopoly buyers
May. 1st, 2018 07:00 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
mtbcYesterday morning the radio bore me news of the plan of the grocery store chains Asda and Sainsbury's to merge. There is an antitrust investigation to be done by the Competition and Markets Authority. I imagine that markets function best when shared across many buyers as well as many sellers. The usual angle is to focus on competition among sellers so that their profit margins remain reasonable.
The radio discussion confused me a little in suggesting that a reason for those chains to merge is to gain significant buying power. Once a buyer is so large that they can greatly influence prices then I wonder if that is a symmetrical kind of market distortion that is no less a failure requiring regulation. Suppliers could be forced into pricing that is so unprofitable as to be deleterious to the wages and job security of their employees, who are themselves consumers when outside work. One may be reminded of farmers often having difficulty in supplying the large grocery store chains.
The argument about having to compete with the likes of Amazon perhaps says more about needing to constrain or break up Amazon rather than to further merge to gain comparable leverage.
The radio discussion confused me a little in suggesting that a reason for those chains to merge is to gain significant buying power. Once a buyer is so large that they can greatly influence prices then I wonder if that is a symmetrical kind of market distortion that is no less a failure requiring regulation. Suppliers could be forced into pricing that is so unprofitable as to be deleterious to the wages and job security of their employees, who are themselves consumers when outside work. One may be reminded of farmers often having difficulty in supplying the large grocery store chains.
The argument about having to compete with the likes of Amazon perhaps says more about needing to constrain or break up Amazon rather than to further merge to gain comparable leverage.
