Government-set Price Floor

And finance Allah Shmoop what is price fixing up Okay

So why are we fixing prices anyway Like when did

they break Okay Yeah Old joke among collude er's And

that's pretty much what price fixing is It's collusion Like

in a given market There are three cellars of zombie

hosiery Extra thick stockings Teo you know keeping all the

goop and bones stuff What one specializes in the fall

line another the spring and another the summer But instead

of competing against each other such that a setup like

this lovely ensemble might fetch one hundred dollars at Zombie

Mart while they collude on pricing and all agreed and

never sell ho shary for less than two hundred dollars

per And zombies well have to buy it or you

know bad things happen All right Well the biggest price

fixer in the world OPEC These guys the Organization of

the Petroleum Exporting Countries the people who control oil price

fixing of oil in their countries is in fact legal

But not in the U S So how do we

police it or manage it Are what do we do

Just embrace Tesla's Yeah Hard to do on a global

scale Well airlines have price fixed in the past So

have computer chip manufacturing companies and well so have self

cleaning litter box companies And if you think about the

motivation to fix prices well it's big Three owners get

together in a bar and quietly opine on their low

profit margins You know the ones they're getting in their

existing business competing against each other The three of them

represent ninety two percent of all the sales in their

industry segment holiday You know solar powered roof tiles segment

at a dollar a tile They make a dime in

operating profit But if they all colluded and sold them

for a dollar forty instead of a dollar bill nobody

would really know the difference the costs or just passed

on to the idiot consumer who simply wants his refrigerator

to be powered by the great and powerful Sun God

But at a buck forty way higher than where supply

meets demand On this graph here Instead of operating profits

of a dime a tile they make like fifty cents

five times the profit number Is all that additional profit

worth the legal risk of colluding illegally in countries who

don't allow you to collude Is it worth the jail

time Well for some it is especially you know those 00:02:21.03 --> [endTime] who look good in orange