Thursday, 13 January 2022

How to help keep supermarket prices higher


The ill-named Commerce Commission (whose oxymoronic* job it is to hobble the market so as to somehow make it freer) has been considering how best to hobble supermarkets to (somehow) deliver lower prices. Everything they are considering will do the opposite.

Under present consideration from a commission consultant is a gold-plated proposal to force the two major supermarket owners to "divest" themselves of their stores in any region in which their market share exceeds 27%. 

What would be the effect of such a thing, aside form the loss of market freedom? Simple

banning them from going past some market share threshold tells them, when at the threshold, to stop competing. That doesn't seem like any kind of good idea. 

The Commerce Commission is full of such non-good ideas, as are the consultants they favour -- most of like men with a hammer looking for a nail on which to use it, while blind to the fact that nails are not even needed (and are anti-productive). Not that they care. They're mighty happy trying to work out how best to build bigger regulatory barriers so that the two major supermarket owners will be coerced into lowering their prices; they don't want to be told that the real solution would be to remove all the barriers to new entrants so that there are more than two major supermarket owners.

But that might do some of the hammer-throwers out of their make-believe jobs.

* The Commerce Commission clearly has zero problem with the concentration of power represented by  govt departments like itself, only that the productive might have it  instead of themselves. 

2 comments:

  1. This comment has been removed by the author.

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  2. Having taken a look at your link towards the end, yes, they are hopeless. We need one of the big players here - Carrefour, Tesco, or Walmart but they are blocking that. It is not just prices that are a problem, but generally low standards in every part of the service.

    As a note, bearing in mind your site name, you may enjoy this: https://www.youtube.com/watch?v=oO7gTt9VfVo

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