> cartel that controls 97% of the frozen potato market
This is a weird and emotionally loaded statement. Properly stated, the top four frozen potato producers have 97% of the market share.
That doesn't sound odd? In a mature market with very little technology innovation (potatoes) and very little geographic specificity (frozen), how many companies would you expect? How many laundry detergent companies are there? How many cereal companies are there?
How was this different in the past, except going back to before the interstate highway system?
It’s different because they are using data at scale to collectively decide on pricing via Potatotrac, ya know, the title of the article…?
The issue of having four players is that it makes the coordination problem of colluding relatively easier, but they are price fixing via giant data warehouse which is algorithmically suggesting how to price.
It’s like Real Pages for potatoes, or at least this is what the article claims and what is interesting.
In an era where you can have a computer churn through a trillion datapoints to arrive at an optimal price, is it even possible to have competitive pricing as was once conceived of? The elements of uncertainty and risk have been so thoroughly eliminated that inflation seems almost unstoppable as you have such a strong signal for what the market will bear.
It’s an interesting question for the nature of free markets but few seem to have caught on to this dynamic…
It doesn't matter how the cartel came to be, if it's a cartel fixing prices, it's illegal. You are doing a lot of water carrying for criminals here, ever consider how that makes you look?
In a healthy economy I would expect the government to prevent that level of concentration and ensure that every potato producer and every potato buyer had multiple local options for processing and distribution. Like you said, mature technology, very little innovation or geographic specificity - anyone with startup capital should be able to get in the business. Instead we let a handful of corporations define and regulate the market for their own benefit. How does that make any sense?
TBH I would think that frozen potatoes might have more competitors. It sounds like the kind of market that could have lots of players assuming that all it really comes down to is a warehouse by train or dock: It doesn't seem obvious that a 10 acre warehouse of frozen potatoes would have an obviously drastic cost advantage over another company with an 8 acre or 12 acre one.
Yet they don’t so clearly its not so easy. Who do you sell your potatos to? Mcdonalds? They probably have a contract already. Where do you even get your inputs, some farm that happens to not have a potato buyer lined up already? Where do you get your machinery for the process, from the toolmaker owned by the competitor perhaps that won’t sell you the state of the art?
Business concepts are easy. Actually doing business is hard no matter what it is. Especially when for one reason or another, 97% of the market is controlled by the potato cartel. Chances are you will find a Great Filter somewhere that ensures this cartels market share is maintained.
> Actually doing business is hard no matter what it is. Especially when for one reason or another, 97% of the market is controlled by the potato cartel.
Yes, it’s hard because you’re trying to fight a cartel. And furthermore, the cartels distribute their products to other cartels - grocery stores that have consolidated over the years into Walmart, Kroger and Publix. And if you don’t like it, you have to change the laws which are controlled and dominated by the cartels and their donations. Thanks to citizens United. The US economy is far from capitalism.
Seems odd to me for a country with 300+ million people in it.
when I hear a “farmer” complaining on the news about losing illegal immigrants and how they can’t afford to pay living wages to people working on their farms. News organizations make it sound like these farmers are individual small businesses when they are actually huge corporation themselves taking advantage of workers.
Those statements are not equivalent. “Cartel” and “top four producers” mean very different things. I don’t know if there is in fact a cartel, but you’re missing the point.
This is a weird and emotionally loaded statement. Properly stated, the top four frozen potato producers have 97% of the market share.
That doesn't sound odd? In a mature market with very little technology innovation (potatoes) and very little geographic specificity (frozen), how many companies would you expect? How many laundry detergent companies are there? How many cereal companies are there?
How was this different in the past, except going back to before the interstate highway system?