Annoying economic stupidity

The Reality-Based Community:

Are gas prices pretty much competitive? Well, either they are or they aren’t. If they aren’t, we have to ask why gas prices aren’t $3.52 already, or maybe $3.54, or maybe $13.54, or why they ever go down.

Whether prices respond to changes in supply or demand has only a little to do with whether there’s competition in the market, and an academic purporting to speak about economics should recognize that. Monopolies are perfectly capable of responding to demand signals by changing their prices or the amount that they’re willing to supply.  (The supply curve for a monopoly is different from that for a competitive market, but that doesn’t mean the monopolist can set whatever price they want.)

On the matter of whether stations should have temperature-compensating pumps, it’s obviously the case that gasoline companies can adjust their prices to get back to the status quo ante, but it should be equally obvious that consumers will do a better job of adjusting their demand if they know what the real price of gas is.

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