Multinationals, homegrown cartels and rising prices

The Greek prime minister's recent letter to the president of the European Commission addressing the "asymmetric power of some large multinational companies," despite its obvious pre-election purposes (it is reminded that Ursula Von der Leyen will be running for office again in the June 9 European Parliament elections, with Kyriakos Mitsotakis' support), brings an interesting question to the fore: Why are baby formula and other goods produced by a handful of multinationals more expensive in Greece than in, say, Germany? And what is Europe (not) doing about it?

Multinationals (effectively all businesses, regardless of their nationality, which operate in a non-competitive environment) determine their pricing policy depending on what each individual market can take. In technical terms, inversely proportional to the elasticity of demand. Simply put, if a price increase will ...