Re: Price fixing among tire manufacturers

Hi All,

> > I've been recently looking for tires (size 205-70-15) and I am finding > among the retailers that for the mileage I'm looking for (80K) and > the UTQGS ratings (treadwear 700, traction A, Temp B) that the > prices are virtually identical. The biggest difference is pricing for the > road hazard warranties and for balancing, etc. from the tire dealers. > > What I really don't understand is why this is the case. For example, > Goodyear tires are manufactured in the US, by an American-owned company. > Michelin, and Bridgestone/Firestone tires are manufactured in China by an > American-owned company. Lastly, Toyo/Tourevo tires are an Asian-owned > firm and are manufactured in Asia. > > I understand reading from the trade rags that US companies have > outsourced manufacturing to Asia to save money. I also understand from > the trade rags that CEO's of Asian companies don't take the gigantic > pay amounts that US CEO's do. > > So, in principle, the Goodyears should be the most expensive, followed > by the Firestone, then the Toyo stuff should be the cheapest. > > Yet, this is not the case. Pricing differers very little, in fact the > Toyo > stuff is a bit more expensive. > > Of course, if I compare a house brand (like Walmart's Goodyear Viva) > that has a much lower UTQGS treadwear rating against the others, I see > big differences. But, I would expect this to be so. > > Now, maybe the tire dealers are making up the differences on the mounting > and balancing costs - but I kind of doubt it. The equipment they use is > all expensive and they are paying a lot of employee salaries, I can't > imagine > they do anything more than break even on those costs. > > Anyway, the point is that there seems to be a wide difference in what the > wholesale cost of the tire ought to be due to structural differences - the > dealers I've looked at seem to have widely different purchasing power ( > Comparing Walmart against say Firestone dealers) and the tire > manufacturers > have widely different corporate structures and the manufacturing is also > different. I cannot believe all these dealers are paying the same money > for > tires. But, they all seem to be selling them for the same money. > > What happened to competition? Seems to me there ought to be a big > case here for an anti-trust price fixing lawsuit against the tire > manufacturers. > Anyone have any ideas? > > Ted

In a free market economy, retail prices are bases on what the market will bear (competition), not based on cost. The fact that two different companies charge the same amount for very similar tires is usually an indication of price competition, and not price fixing.

Reply to
Mark A
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