It is not well established at this point. I get the impression you're reading a textbook on economics, and not how it works in the real world.
Take covid inflation for example. Covid caused supply chain issues which then caused a temporary bout of inflation, however, companies took this as an opportunity to increase their profit margins more than they need to. They specifically bragged about this in quarterly earnings calls.
If companies truly compete on cost then how does stuff like that happen? Shouldn't it have been corrected by now? But that's not what we see, we see companies continue to increase prices with little consequence.
> It is not well established at this point. I get the impression you're reading a textbook on economics, and not how it works in the real world.
You're writing this from the comfort of your home where you're enjoying the fruits of the most significant quality of life improvements over 200 years. Hedonistic adaptation has blinded you to all of the evidence that's staring in the face, like the screen you're reading on right now.
> however, companies took this as an opportunity to increase their profit margins more than they need to. They specifically bragged about this in quarterly earnings calls.
Temporary aberrations from extreme disruptions do not refute the general rule.
Take covid inflation for example. Covid caused supply chain issues which then caused a temporary bout of inflation, however, companies took this as an opportunity to increase their profit margins more than they need to. They specifically bragged about this in quarterly earnings calls.
If companies truly compete on cost then how does stuff like that happen? Shouldn't it have been corrected by now? But that's not what we see, we see companies continue to increase prices with little consequence.