we may not be disagreeing so much then. i don’t claim this kind of thing persists indefinitely. firms want to avoid both price shocks to customers and profit shocks to themselves. unfortunately those goals conflict here. 1/

so, for the immediate term, larger firms may smooth the price shock over a period of, as you suggest, two to three years, and manage the potential profit hit by looking to other markets not under unusual stress. 2/

that second part would be hard if firms were price takers, but they are not, and even less so because their main competitors face the same challenge and are interested in the same solution. 3/

over two or three years, yeah, i agree, if the tariffs are still in place firms will largely have passed them through, and tacitly coordinated price increases in other markets will have begun to unravel. 4/

the idea isn’t that firms permanently defy competitive forces. it’s that they have some degree of temporary play, and more temporary play when industries are consolidated and face similar challenges. 5/

economic profit, along with resilience and capability across a variety of dimensions, derives from that play, from how far and wide they can or can’t push their deviations from textbook behavior. /fin