The copycat effect

The "copycat effect" occurs when competitors take similar measures to benefit from the same advantages. This can lead to multiple companies simultaneously reducing production quantities, withholding inventories, or making exclusive distribution agreements, further enhancing scarcity.

In such cases, prices for the affected goods can continue to rise as demand exceeds the limited supply. Consumers may have to accept higher prices and have fewer choices, leading to an unfavorable situation for them.

The "copycat effect" can also increase the intensity of competition within an industry as companies try to outdo each other and secure a larger market share. This may lead to a dangerous race for scarcity, with potential long-term negative consequences for consumers and the market.

It is essential for regulatory authorities and antitrust laws to monitor such practices and take appropriate measures to ensure fair competition and consumer protection. Striking a balanced equilibrium between companies' profit-seeking motives and consumer welfare is crucial to promote a healthy and sustainable economy.