Supply and demand

I think the reality of the industry is more complicated than the number of firms, their capacity, and the death rate. Normally, with more suppliers, and therefore greater supply, prices would go down. Suppliers might try to maintain high prices and keep their net profit the same on lower volume, but a more efficient supplier could offer a lower price, gain more volume, and so on. This is the basic conventional wisdom of economics. What I see in my state, Idaho, is that the higher density population centers, with more suppliers, have lower prices than the remote areas. But I haven’t made a study of the per capita distribution or death rates, and am not prepared to state any firm theories about why the distribution is the way it is. Other factors that affect prices include barriers to entry (training, and licensing requirements), barriers to exit (even with low volume, if the mortgage is paid for, and if there is little market for selling a firm, businesses can limp along, add or subtract staff as demand varies, moonlight at other jobs, etc.) The size (facilities, staff, capacity) of funeral establishments varies widely, beyond whether it’s a branch or a chain, and so a simple tally of businesses doesn’t necessarily tell us all we need to know. The inference that I would draw from the numbers tabulated here is that the oversupply probably explains relatively low profitability for the businesses. If prices to the consumer remain high, it seems more likely to be in spite of the oversupply rather than because of it. As for the accuracy of the numbers here, before I would cast aspersions (or give credence to someone else’s complaints), I would want to see some alternate research. I happen to know that the number of firms listed is correct for Idaho (compared to our Board of Morticians license database), and that there is nowhere near a 2.33 facility-to-owner ratio in our state. It might be 1.1 or 1.2, tops. None of the vague complaints in the comments shows anything like the credibility the FCA has earned for its compilation with sources cited.

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