Competition - Is it Really Good for Consumers?

The Market Can't cure Medicare  (Time, by Bill Saporito, 5/2/2011)

I read the above linked article in my hard-copy of Time, and couldn't get it out of my head.  So I decided to find it online, to share with my faithful readers.  The title is deceiving; though the author does focus on Medicare in the intro and conclusion, the main bulk of the text is actually an examination of competition.  Namely, he is discrediting the idea that having multiple companies compete for your business actually drives down prizes all of the time.

Airlines, gas companies, cable and satellite providers, soda makers, and computer operating system producers are all examples of industries where competition has not had a direct impact in creating price wars that benefit the consumer.  On the contrary, some companies, like Comcast and AT&T seem to raise their prices together, and laugh all the way to the bank.

So, I decided to start keeping track of instances where competition doesn't seem to have much of an effect on price.  This thread will be a great place to list the industries I think of.  And I already have one to add to my list:  Vitamins.  I find it incredible that condensed cranberry supplements, and garlic tabs can cost a quarter a piece!

Secondly, make-up and body products.  My last two trips to Ulta did enough to convince me that perfume makers, and "prestige" make-up manufacturers are on to something big.  I will admit that there is a HUGE quality difference in some make-up necessities, such as foundation and mascara.  However, eyeshadow and lip gloss are pretty much the same regardless of whether you pay $5 or $25.