Some More Wisdom from David Cay Johnston on Flawed Economic Theory :
Not every opportunity to profit because of above-market prices is filled by a competitor. Indeed, in my books I have shown how rules discourage this in many markets. In some markets, notably electricity, the rules tend to raise prices, not lower them, despite seemingly robust competition. Enron, BTW, wrote the original rules for
In an oligopoly, each seller may profit more by not trying to take business away from competitors (see my discussion of railroads in The Fine Print). So long as there is no direct collusion, such practices are not illegal. For examples that seem to flout the laws of competition see the
In a world of computers our notions of price competition are out of date. Class action litigation in the 1990s against the airlines for price fixing revealed that when one carrier changes its pricing the other major carriers adjust their millions of prices (every available seat 364 days out) in less than five minutes. This asymmetrical information goes far beyond airlines — and far beyond what anyone imagined when the Sherman and Clayton antitrust
If we had a rule that prohibited closing such accounts we could expect less business for PayDay lenders.