David Brodbeck wrote: > > The free market ain't always so free. I used to live in a small town > where all the stations would mysteriously always have the same > price...and always several cents more than the stations in surrounding > towns. I think they got together over coffee at the local diner and > decided what the price would be each week.
It can be much simpler than that. Take south Pennsylvania avenue in Lansing for example. There are a couple of price leaders on that stretch of road, and everybody else just looks at their prices and adjusts accordingly. "Hey, where'd all those customers come from?" "Looks like Admiral went up 15 cents a gallon" "Well, what are you waiting for, go change our sign". The big three automakers used to collude in the financial news. GM might say "we plan on raising MSRP an average of 5%". Then in the next day's paper would be an article giving Ford's response. If Ford agreed, they'd raise their prices. If Ford wouldn't raise their prices, GM would announce they had decided hold the line too. Chrysler seemed to just do what the others did for the most part.
