Because more often than economists realize consumers can and will reject a higher price. There’s A LOT of substitutes for most things outside of commodities.
Try selling products on Amazon, and you’ll experience this. There’s a clearing price for your product, your costs be damned. If you try to “pass it on” some other product—-probably in a different category—-will out compete you, so you must forgo profit to stay competitive.
It’s a little different when the price goes up across the board (COVID inflation), because everyone experiences the same increase and everyone passes along the cost.
As a concrete example, I sell a card game on Amazon. If I shift the price up and down, I can see supply and demand in action: there’s an optimal price for my product where I maximize units sold. If I try to raise my price customers will go buy another card game. If we all raise our prices, customers will switch to some other toy. If all toy prices go up too far, people will send their kids to the park.
My point is that unions are a nuanced topic. I disagree with the terms of this strike, but if you listen to the longshoremen you can hear their anxiety.
There’s some middle ground we need to find, and throwing supply and demand curves around in absolutist terms won’t do that.
I think the ports will just pass along the cost. Whatever bargain the union strikes will be uniform across all of the ports and so they won't be able to undercut one another.
>It’s a little different when the price goes up across the board (COVID inflation), because everyone experiences the same increase and everyone passes along the cost.
What do you think will happen if globalization was killed? Given how interlinked economies are right now and how much US imports, widespread price rises like you described is almost inevitable.
Try selling products on Amazon, and you’ll experience this. There’s a clearing price for your product, your costs be damned. If you try to “pass it on” some other product—-probably in a different category—-will out compete you, so you must forgo profit to stay competitive.
It’s a little different when the price goes up across the board (COVID inflation), because everyone experiences the same increase and everyone passes along the cost.
As a concrete example, I sell a card game on Amazon. If I shift the price up and down, I can see supply and demand in action: there’s an optimal price for my product where I maximize units sold. If I try to raise my price customers will go buy another card game. If we all raise our prices, customers will switch to some other toy. If all toy prices go up too far, people will send their kids to the park.
My point is that unions are a nuanced topic. I disagree with the terms of this strike, but if you listen to the longshoremen you can hear their anxiety.
There’s some middle ground we need to find, and throwing supply and demand curves around in absolutist terms won’t do that.