This is not on the right track IMO. The theory presented here doesn't help, because no "greed index" or desired profit margins increased. (As a producer/businessperson, I can tell you that desired profit margins are always infinite.) "Greedflation" is not a thing that anybody is claiming. *Achievable* profit margins increased. For whatever reasons.
Easiest understanding of that: firms (at least perceived that) they were facing steep demand curves: Price increases had limited impact on quantity sold, aka low elasticity of Q to P. Their pricing-related comments on earnings calls made that crystal clear. And it seems their perceptions were right
At the extreme: If the demand curve is vertical, increasing prices is printing *pure profit,* straight into owners' pockets. (Vs. boring revenue gains from >er Q. Yawn, so old-school.) Ka-ching. Who's not gonna do that?
Now: *why* the steep (perceived? actual?) demand curve? There's the question. Corporate concentration comes quickly to mind. If there's a limited choice of sellers and they're all raising prices... Where ya gonna go?
Correcting Economic Understanding: "Greedflation"
This is not on the right track IMO. The theory presented here doesn't help, because no "greed index" or desired profit margins increased. (As a producer/businessperson, I can tell you that desired profit margins are always infinite.) "Greedflation" is not a thing that anybody is claiming. *Achievable* profit margins increased. For whatever reasons.
Easiest understanding of that: firms (at least perceived that) they were facing steep demand curves: Price increases had limited impact on quantity sold, aka low elasticity of Q to P. Their pricing-related comments on earnings calls made that crystal clear. And it seems their perceptions were right
At the extreme: If the demand curve is vertical, increasing prices is printing *pure profit,* straight into owners' pockets. (Vs. boring revenue gains from >er Q. Yawn, so old-school.) Ka-ching. Who's not gonna do that?
Now: *why* the steep (perceived? actual?) demand curve? There's the question. Corporate concentration comes quickly to mind. If there's a limited choice of sellers and they're all raising prices... Where ya gonna go?
Thanks for listening.