Err, never Ollie?

Consider the example of dynamic pricing. If you order goods or services online, you’ll probably have noticed that when booking a taxi or buying a rail or airline ticket you can be quoted different prices only minutes apart. The operators will argue that, armed with their complex algorithms, they are responding to a surge in demand with flexible pricing. In principle, that will benefit consumers who are willing to be flexible about when they travel.

It’s not easy to separate that legitimate practice from formal collusion. When does dynamic pricing shade into fixing a market?

Sigh:

A particularly stark and serious example was the banks’ collusion to fix the interest rate known as Libor (the London interbank offer rate), which fed through into market interest rates across the economy.

It wasn’t the banks, was it? It was specific traders, not the banks.

Then this is just insane:

In these unprecedented economic times, the most effective preventative course is pre-emptive rather than reactive. Online retailing is susceptible to collusion because sellers have to go through a single marketplace to reach customers. Their margins are at the mercy of whatever cut Amazon decides to take for itself, which in turn dictates that they will try to recoup the cost from consumers. Competitive capitalism points to the need in retailing, as in other services, to break up the tech cartel. Its pioneers are rich enough already and should have no objection to being cut down to size.

That 5,000 people are using amazon as the fulfillment house makes price collusion among 5,000 people more likely how?

19 thoughts on “Err, never Ollie?”

  1. ‘In these unprecedented economic times’

    BS. When your memory extends no more than 3 years back, everything is ‘unprecedented.’

  2. “It’s not easy to separate that legitimate practice from formal collusion. When does dynamic pricing shade into fixing a market?”

    That is actually really really trivially easy. Does the algorithm interact with a competitors system to determine a price above the competitors rate? Yes – collusion is happening, No – collusion isn’t happening (at least within the algorithm, inflating prices based on assigned regions could be coded).

    Its worth noting that looking at competitors published prices to match/undercut isn’t collusion (unless you think John Lewis promising to be “never knowingly undersold” meant they were serious market fixers).

  3. He is of course perfectly correct in his last paragraph. Sellers do provide information to other sellers by the price at which they offer their goods. And other sellers do use that information to set their prices competitively. And yes, they’re all factoring in Amazon’s charges to sellers. That is indeed collusion. That’s how an open market works FFS! It’s not as if Amazon even have a monopoly. Slightly different model, but there’s always EBay, for a start. Then you have the entire retailing industry. Both high street & online. And all their mark-ups are influenced by each other. So what’s exactly is it he’s in favour of? Blind auctions?

  4. cartel? What is this nepotistic spastic on about?

    I can go to Alibaba, buy a load of headphones and set up a shop on Shopify, Squarespace, or spin up my own e-commerce site. That Amazon is often the cheapest around (but not always) is because they’re super efficient.

    And all of this assumes that people only shop on price. I tend to buy computer parts from companies like Novatech because I can call up and ask or advice, and if there’s a problem, I’m talking to computer parts people. Costs me a few quid more but I prefer it.

  5. BlokeInTejasInNormandy

    BiS

    What he’s in favour of is captured in the last couple o sentences.

    “Competitive capitalism points to the need in retailing, as in other services, to break up the tech cartel. Its pioneers are rich enough already and should have no objection to being cut down to size”

    Or, more shortly, “Kill markets and all those Evul Capitalists Right Now.”

  6. Gamecock, exactly. Recently, the Spectator had an article on top five something US Supreme Court movies. All of them were since 2015. 4/5 had a black main character. I started remembering this 70’s or 80’s film with Walter Matthau I saw at the time on rental VHS. Went to imdb and found First Monday in October (1981). That film would’ve been most relevat storyline-wise, a judge dies, they need to get a new one to the Spreme Court. But how was the Spectator writer supposed to know this, a lefty young fucking moron twat, looks like the fucker writes for the Guardian etc. A film critic. A cunt I say.

    https://en.wikipedia.org/wiki/First_Monday_in_October_(film)

  7. Rant continues. That is the fucking problem with current cinema and film critics, their horizon is max five years. Many films I was watching in the 80’s are almost impossible to find now. Where can you see Cat People, The Cruising, Toback’s Love & Money (absolutely nowhere this one) unless you buy the DVD. The good films from the 70’s and 80’s are not streaming anywhere. I’ve given up Netflix, I will bend over when the new seasons for Shtisel and Fauda arrive. I should look into Amazon Prime a bit more but I find hard to find films there – you can’t really browse, you have to have an idea first then go looking.

    Tonight’s Film is Shampoo (1975)
    https://youtu.be/9Ar0TT7VmOU

  8. @Jussi
    I’m told you could try accessing streaming services through a VPN. The catalogues for the UK (or anywhere) may be different from the US, depending on how they’ve negotiated the streaming rights.

  9. I used to have VPN to watch Iplayer during my wilderness years but being back in the old blighty and BBC being what it is… I find bying the actual dvd or bluray makes me committed to actually watch and think about the movie.

    Currently I’m annoyed this one is only region 1:

    https://youtu.be/bqWv-3IkV-0

  10. Yep! Ollie broke the internets! Well done, I hope you’re happy now. Can’t take you anywhere, Ollie! What are you like…

  11. Amazon sellers – like all other businesses – have their margins affected by their costs. Insurance goes up, postal costs go up, petrol goes up, internet fees go up, amazon fees go up etc then the normal method is pass the increase on to the customers by higher prices.

    Amazon are not fools, they don’t just change their fees week by week. Can be on the same percentages or same fixed fees for years.
    Then some cost changes and the business adjusts prices or decides to leave them as they are, taking a reduced profit, for a time period.
    Then adjust prices for a lot of things at once – say February when postal changes are known about.

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