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To: expatpat
The 3rd option is to leave his higher price in place while his competitors do the same, so that all enjoy higher margins.

Which requires that businesses can collude with each other and prevent defections, and if they can do that, they can just raise prices arbitrarily at any time regardless of the tax system. All available evidence suggests that they cannot.

140 posted on 06/10/2005 12:33:19 PM PDT by ThinkDifferent (These pretzels are making me thirsty)
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To: ThinkDifferent
Doesn't require any collusion -- A is happy with his new price, B sees that A is sticking with it and is happy with his price, C sees.......

When the Euro switched in for Local Currency in Europe, businesses took advantage of the cover and jacked up prices. They didn't come down again, and consumers are still bitching about it in Germany, Italy, and Greece.

158 posted on 06/10/2005 12:43:29 PM PDT by expatpat
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