Isn’t this reversing cause and effect? Corporations are able to raise prices because consumers are willing to pay higher prices. Corporations always want to make as much profit as they can. If consumers can pay more, you get inflation.
This suggests that the US market has gotten less competitive. I wonder how much it has to do with ownership of competing firms by a few large index funds with concentrated voting power.
There's increasing supply of investments at higher rate of return, bond yields are close to 4% which means riskier investments need to pay more to compete.
I just wonder if the cooperation might come in the form of, say, one powerful shareholder of both competitors making calls to the boards of directors of both competing companies.
Unexpected consequence of passive investing?
And depending on the industry, there might not be much more to be gained by scaling up. Going from 45% to 60% of the market might not be more profitable than an extra few percent per unit.
We usually expect that competitors would try to compete, and going from 5% to 10% market share would result in getting undercut so badly that you lose far more customers than the higher margins are worth. It's not so easy to hand-wave the reasons why that hasn't happened here.
Multilateral increase in margins demonstrates a lack of competitiveness between competitors.
This isn't really a matter of competition, it's that people's willingness to pay (in nominal value) is much higher.
If people's willingness to pay were less, then increasing prices would loose a greater portion of the market.
It's also has an impact on what products get made, and investment in r&d. If you fall behind the competition in terms of quality, you loose marketshare.
As I said on the flip side the fact that all workers are pushing for higher salaries isn't a reflection of collusion between different sets of workers, it's just a reflection of the new economic conditions on the ground.
However, if both companies had enough shareholders in common -- or just one big shareholder in the Soda Index -- then they sort of stop being competitors, and just become brands.