[Vision2020] Gas prices...........

[Kenneth Marcy]

On Thursday 07 August 2008 08:29, Tom Ivie wrote:
> I still don't understand this free market thing. Can someone explain how 
free market works with these gas prices?

A free market does not work with gas prices because there is no free market 
for gasoline. What does exist for the gasoline market is an oligopoly.

Two paragraphs from Wikipedia:

A free market is a market in which prices of goods and services are arranged 
completely by the mutual consent of sellers and buyers. By definition, in a 
free market environment buyers and sellers do not coerce or mislead each 
other nor are they coerced by a third party. In the aggregate, the effect 
of these decisions en masse is described by the law of supply and demand. 
Free markets contrast sharply with controlled markets or regulated markets, 
in which governments directly or indirectly regulate prices or supplies, 
distorting market signals.

An oligopoly is a market form in which a market or industry is dominated by 
a small number of sellers (oligopolists). The word is derived from the 
Greek for few (entities with the right to) sell. Because there are few 
participants in this type of market, each oligopolist is aware of the 
actions of the others. The decisions of one firm influence, and are 
influenced by the decisions of other firms. Strategic planning by 
oligopolists always involves taking into account the likely responses of 
the other market participants. This causes oligopolistic markets and 
industries to be at the highest risk for collusion.


Ken