Tendency to Rise

Shane Mage shmage at pipeline.com
Mon Jan 20 09:27:47 PST 2003



>Why do firms raise prices more readily than reducing them?

This question was resolved by Paul Sweezy some 65 years ago. The first oligopolist to cut prices will be viewed by its confreres as "pulling a fast one" to increase its market share. The response will be retaliation, raising the danger of a "ruinous price war." But the first to raise prices will be viewed as a "leader," entitled to gratitude for facilitating everyone else's rises by "testing the water" to show that the higher prices "can be made to stick."

Shane Mage

"When we read on a printed page the doctrine of Pythagoras that all things are made of numbers, it seems mystical, mystifying, even downright silly.

When we read on a computer screen the doctrine of Pythagoras that all things are made of numbers, it seems self-evidently true." (N. Weiner)



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