Some time ago, I came across a term describing a specific phenomenon observed in free markets. I'm now looking for this term.
When comparing prices of certain staples in some countries, one quickly notices that their prices are exactly the same in different supermarkets and discounters. For example, in Germany, the cheapest price for 1 kg of sugar in any supermarket or discounter is 65 ¢. I have never seen a different price for this for years. The exact brand of sugar is different for different supermarkets or discounters, but the cheapest offer is always 1 kg for 65 ¢. It's the same for eggs, milk, flour, yeast, salt, curd, and many other staples.
This price does not change as its in every competitor's interest to keep it exactly where it is:
- If a market participant increases the price to make more money off the specific product, many people will avoid the supermarket or discounter because their prices are perceived to be higher in general as the staple in question serves as a price comparison between shops for many people.
- If a market participant decreases the price to attract more customers, any competitor will decrease the price of their equivalent product to not appear to have higher prices than the participant that decreased their price.
This phenomenon results in supermarkets and discounters limiting the amount of a product customers can buy rather than increasing prices when running short of resupply or taking losses.
Note that I'm not looking for the term "price collusion". The term describes the exact phenomenon described above and does not suggest that price collusion is happening.
I'm not 100% sure this term exists in English. I only know that it exists in German because I read about this phenomenon on the German version of Wikipedia, but no one I asked in real life can tell me what it is. I guess that it exists in English, too, as it is an economic phenomenon not limited to any specific geographic region. Now I need the English term (if it exists) for usage in an English document.