Comment Re:I see a problem here... (Score 1) 380
Once again, this conversation about cartels is a tangent from the original point. But I will humor you.
1. This is not specific to cartels. This is very typical of market leaders, with or without a formal cartel agreement. It is an excellent example as to why the government should not be involved in markets.
2. This is just silliness. When prices go up, demand goes down (in varying degrees, depending on the elasticity of demand). Furthermore, input prices do not determine output prices. If a cartel wants to increase prices, all it has to do is agree to raise its prices. It's absolutely ridiculous to suggest that they need to increase their input costs to raise their prices. In fact, intentionally increasing input costs to increase prices is about the stupidest thing I've ever heard. You do not make more money by charging people more unless demand is very inelastic. You make more money by charging people LESS (and you charge people less by reducing input prices), so as to increase DEMAND. A far more likely scenario in a hampered market is that a group of businesses (not necessarily even a cartel) will lobby for special privileges and try to keep out competition. The more hampered the market is, the more likely this will happen; clearly then, the solution is to unhamper the markets.
3. That's fraud and hardly unique to cartels. Fraud has its own consequences. Like cartelization, there may be short term gains to be had by committing fraud, but in the long term, it tends to catch up with the perpetrator.
But to reiterate, none of this has *anything* to do my original claim, which is that it makes perfectly good business sense to enter a market with a vastly cheaper product offering than the current alternative. Depending on the specific market in question, there may be regulatory issues, as you've so astutely pointed out. Once again, the clear solution is to remove those regulations and to return to a free market and ideally take the power away from government to interfere with markets. But one step at a time.