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Culture War Roundup for the week of August 12, 2024

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The only successful way to perform market cornering to capture the producer surplus is by regulatory capture, not 'lose money until competitors all exit, then hike prices'.

I feel like pointing out that this("lose money until...") is the actual exact method used by Dollar stores to choke out competition. They open a bunch of stores in an area, sell at a loss until they can kill the competition, then consolidate their stores into one and raise the prices once they kill off their competition. Predatory pricing is actually a real thing that happens, and the effectiveness of it is great enough that people want the government to do something about it. Sure they don't have a true monopoly, but an effective local one is a decent substitute.

Dollar generals are an interesting case, and they do indeed perform predatory pricing once local competition is snuffed out, but I don't think they are laughing their way to the bank once they kill the competition. Their price rises are only to whatever the local equilibria is for their provided service, and any presumed producer surplus the monopoly is expected to accrue is obviated by theft ("its only shrink" will be claimed by insistent progressives), low barrier alternatives (DG isn't the only dollar store after all, and delivery exists) or other intrinsic factors. DG does not have a cheat code that forcefields their stores against poverty induced crime paired with ineffective law enforcement.

The negative effect of DG isn't the subsequent price hiking as DG tries to stabilize its price needle after factoring in theft while outcompeting alternatives, it is the utility calculation of the goods on offer and the utility destruction stemming from misallocated capital. The legacy mom and pop stores are only in dead small towns or shit neighborhoods because they are the ones with a 'monopolistic' hold as the locale simply cannot justify additional investment for higher grade inventory, much less fitouts. The fresh produce on offer (I presume; I've never seen fresh produce at a black-heavy bodega, but spanish harlem always had peppers and onions) has a presumed higher utility per dollar for health outcomes, but for personal utility calculations that same dollar spent on ricearoni and DMD goes much further. These 'food deserts' exist because the local population simply was not having its personal utility preference exercised by expensive and effort heavy 'healthy' foods. The cheap consumer surplus phase of DG expansion is DG rolling the dice on where the stable marginal surplus needle lies, and DG bets on its competitive advantages to be the one that captures a greater marginal surplus. The consumer surplus returns to its stable point after the ZIRP-funded gambling ends. At no point is DG laughing its way to the bank.