Brian Albrecht on the War on Prices

ICLE Chief Economist Brian Albrecht was cited by Ryan Bourne in his Subtack newsletter The War on Prices about Brian’s chapter in Ryan’s forthcoming book of the same name. You can read the full post here.

The economics of this are pretty simple. As Brian Albrecht explains in his chapter in The War on Prices, corporations are disciplined in what they can charge by both competition and customers’ willingness and ability to pay. If one firm decides to jack up prices, they’d not only risk losing customers to their rivals, but any existing consumer paying the higher price would have lower money balances left over to spend on other goods and services, reducing demand and so prices for other items. Hence, some companies just unilaterally deciding to charge higher prices can’t cause economy??wide inflation — a sustained rise in the general price level — because, absent higher overall spending, other prices will fall.