Friday, March 19, 2010

[gevyogez] Capitalism prices

The way to encourage market competition and discourage price fixing (game theoretically predicted to be mutually beneficial to producers) is the forbid two producers from offering the same price on the same product. They must differ by at least one cent, or for items where the consumer typically buys at least 5 at a time, differ by at least a tenth of a cent per unit (e.g., gasoline).

We need one piece of technology: a time-stamped price announcement and unannouncement system. When two producers conflict on the same price, the one who started using the price first gets to keep their price; the other must change. Furthermore, the system needs to be aware when a producer has changed its price, allowing another producer to start using that former price. And, we need a way to check check that the announced price is the price the producer is actually charging consumers.

We could have a "futures" mechanism to make an announcement of a future price, so long as that price is not currently in use, or there is an earlier-announced (futures must also be time stamped) future that could be being exercised.  A competitor may use the future price until the exercise date. The right to block someone from using your price begins when you actually start using it, not when you announce it.  I think we also need conditional futures, which allow a price unless it is already in effect. 

Should consumers be permitted to exercise the future price?  This could thwart bogus future announcements.

This is getting complicated.

Perhaps it can be rolled out for gasoline, first.

Bertrand duopoly

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