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Bill Flarsheim's avatar

You make a good case against “strong greedflation,” the idea that greedy companies are driving our current inflation. But I think there is case for “weak greedflation.” Companies with market power, who can hold prices above the marginal cost of production, act to preserve their margins as supply costs rise. This forces the full impact of tight supply onto other sectors, consumers, labor, and small business. Because large companies (rent collecting) can pass on their full increase in costs, the price adjustment mechanism in the economy is stiffer, making it harder to use slow inflation with government tightening. In my view, “greedflation” is not the cause of rising prices, but it does make inflation more persistent.

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David Ennis's avatar

Don't we need to look at which products and services had increased prices and by how much? It's possible that firms with high market power took the opportunity to push the envelope on their prices to test the water on demand elasticity.

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