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Single Idea 24423

[catalogued under 24. Political Theory / D. Ideologies / 11. Capitalism]

Full Idea

As each entrepreneur strives to increase his profit by cutting his price slightly, hoping thereby to seize a larger portion of the total market, the market price of his commodity falls steadily, and everyone experiences a decline in profit

Gist of Idea

If you competitively cut prices to gain advantage, you push all the prices down

Source

Robert Paul Wolff (In Defence of Anarchism [1970], 3.1)

A Reaction

This is the logic which leads to the universal tacit cartel of keeping prices higher than they need to be. A complex instance of the Prisoner's Dilemma. How come all the plumbers in an area charge roughly the same rate?

Book Reference

Wolff,Robert Paul: 'In Defence of Anarchism' [Harper Torchbooks 1976], p.75