Booty Cheeks

Companies cannot just lower the price of their products. They will determine how much profit they would like to make per sale. If Walmart and Costco are selling the same product, If Walmart is charging $5 more than Costco, everybody will go to Costco. So now a Costco has two options: lower the price of the product and take less profit or find an efficiency.

Efficiencies are ways to lower cost or time to move a product. This includes manufacturing costs, labor and taxes and fees. This way companies can compete against each other, incentivizing each other to find efficiencies in the market.