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”
If a New Zealand fisherman catches a seabream in New Zealand, he makes a profit of $9 per kilogram, but if a tourist catches it, $88 goes back to New Zealand. This is because to fish a seabream, the tourist has to spend money on flights, hotels, and all sorts of rentals. The opportunity cost and value-added will change as B2B becomes B2C. - Joseph's "just my thoughts"