Pricing Power : The phenomenon where the value of money falls below the price of goods is called inflation , and it is said we are currently in an era of inflation. However, it’s not that simple. Inflation is realistically characterized by prices not rising all at once during an inflationary period but rather increasing rapidly for some items and slowly for others over several years. This phenomenon is known as the ‘ Cantillon Effect .’ In other words, inflation is neither uniform nor regular. Conversely, when prices fall below the value of money, it is referred to as deflation . To survive deflation, companies must innovate, often by reducing costs and expenses. During inflation, rising costs must be passed on to other economic agents through increased prices, a concept known as Pricing Power. Since companies cannot pass on all the rising costs, many go bankrupt during periods of inflation. - Joseph’s “just my thoughts”
When you go to the supermarket to buy vegetables, the prices are displayed. The final indicator of all the factors involved in growing the vegetable is its price. That price acts as a signifier . However, the price often changes. What causes the signifier to change? The reason could be the farmer, the climate, the distributor’s situation, or one of these factors might contribute. However, in today’s complex systems, another variable unrelated to vegetable cultivation could also affect the price, such as the COVID-19 pandemic . The result of the interaction of these variables is the price. A change in the previous price points leads to a singularity in the ecosystem . Understanding what that singularity is and why it occurs can help us see the world differently. Depending on the analysis, we either take profits or identify the cause of losses. We should focus on singularities that alter the state of equilibrium . - Joseph’s “just my thoughts”