Actually, it would be in your both interest to collude being the only two guys with the water, unless you two were like mortal enemies or something like that. — Posty McPostface
Hmmm... are they really illegal, or are there in truth legal and illegal forms of the same thing? For example, take airplane seats. Business class gets a slightly bigger chair and slightly different food. Is that worth +$1,000 compared to economic class for a 2 hour flight? I don't think so. So clearly this is market segmentation - a legal form of what is very similar to price discrimination.It was an example, not meant to be taken literally, but it's why in the real world monopolies and market fixing are illegal. The point is, presuming they are in competition with each other, they would not both work out what the price 'should' be and then "may the best man win", they undercut each other to get the sale until the lowest possible price was reached. — Inter Alia
it's why in the real world monopolies and market fixing are illegal — Inter Alia
>:) - Peter Thiel wrote a good book on economic philosophy and monopolies called Zero To One.I'm not sure if this is true; but, most business entrepreneurs aim for being a monopoly. Sometimes it's the most efficient means of resource allocation for some specific type of good or service. This is particularly true for the technology sector. Don't quote me on that. — Posty McPostface
The "good" and "bad" are psychological associations made based on price. The $200 one may be as good as the $10,000 one in reality. — Agustino
I think it's wrong to think that this would represent demand. I think rather that poor people would want one at the price they can afford one. That's where they are found on the demand curve.(poor people would like one too, they just can't afford it). — Inter Alia
Oh sure, but psychologically what really makes it a different product is its higher price :P£1000 shirt has something about it that makes it a different product from the £5 shirt, maybe a label, maybe the prestige of being associated with a famous person, the demand is not created by being rich (poor people would like one too, they just can't afford it). — Inter Alia
It doesn't make it "high" in demand. Rather that, if you go back to the basics of the demand curve, you see that some people (fewer people) are willing and able to spend more for Tshirts, and some people (more people) are only willing and able to spend less for it.even a rich person would not buy the same product for a hugely inflated price for no reason, there still has to be something about that product that makes it in high demand. — Inter Alia
Again these are grey waters here. In some situations and in some forms this is illegal, in others, it isn't. Maybe we don't agree on it, but rather the salesman and I become partners in a new LLC, and that LLC sells the water. What's the problem then? Or maybe we each sell one water at the price of half his wealth each.In America the Sherman Antitrust Act 1890 prohibits restraint of trade and abuse of monopoly power. In the UK the Competition Act 1998 does much the same thing but with more restrictive powers, but in both cases, yes it would be illegal to do what you're suggesting the water salesmen do. — Inter Alia
They do want the shirt, at a price they can afford. I'm not talking about fictive and impossible wants now, but real ones. And I'm sure economists do much the same.I don't agree that poor people don't also want the expensive shirt — Inter Alia
Psychologically this seems to be the case. If you study consumer psychology, you'll understand that we're quite certain that it IS the case in fact.I don't agree the the higher price is what makes the difference — Inter Alia
You're confusing things. It doesn't go at a higher price because the demand for it is higher than the demand for the other shirt. For all intents and purposes, the demand could be the same, for instance, but the supply curve would be lower. Or it can be psychological as I've explained.'something' about the shirt isn't what makes it 'high demand' — Inter Alia
rather the salesman and I become partners in a new LLC, and that LLC sells the water. — Agustino
You're confusing things. It doesn't go at a higher price because the demand for it is higher than the demand for the other shirt. — Agustino
I don't mean it always happens for all products. In the example I gave though, it's absurd to say that the demand for one shirt is greater than the demand for the other based on Bayesian probability. They're the same kind of shirt afterall. It's more likely that the difference is psychological given that they are the same kind of shirt than that one is demanded more than the other.I get that it's a possibility, what I'm not getting is why you think it's definitely what happens. — Inter Alia
They're the same kind of shirt afterall. — Agustino
Well sure, if you count the presence of a brand name written on it as being a different T-shirt... As I said, technically different, but really the same. I for one don't count a branded product to be different from a non-branded product just because there's a name on one and there's no name on the other.That's your presumption, I've not seen any examples in the real world. All the expensive shirts I've seen have either been made of better materials, associated with some famous designer, worn by a famous actor. I've never seen two identical shirts, one in mayfair selling for £50 and one in the supermarket for £5, not the same shirt. — Inter Alia
Exactly. That's all that matters. We're in the business of getting sales. Getting their attention is the first step. This isn't to say that you don't have to follow up with the quality, but the quality is irrelevant if you cannot get their attention to begin with. So price of $200 loses in the scenario provided previously. Regardless of the quality that the person could provide - it may be the best quality out there, doesn't matter.All they're doing is estimating the quality of the product using price — Inter Alia
There are lots of industries where "theft" is common. In the internet world, SEO optimization companies will many times take your money and you'll never hear from them again.if a product turns out not to be the quality they were expecting it will very soon lose sales and become a loss for the company, they will reduce it's price to meet the actual demand for such a low quality product. — Inter Alia
It's almost the fundamental assumption of market economics that the market will correctly value stocks (and other assets) in the long run. So everyone takes this on faith, more or less.It wouldn't be of any interest to the investment firm that the stocks were undervalued unless they expected them to soon return to the value they expect. — Inter Alia
:s I've never seen nor heard about an investor or a businessman "guessing" what the supply/demand led value will be. These are very abstract concepts, investors tend to use more practical tools in decision making. There are also different types of investing. Value investing is certainly interested in whether an asset is undervalued or overvalued for example. Looking at balance sheets, P&L statements, DCF analysis, and other such tools may be used to determine whether a stock is undervalued or overvalued. Certain forms of stock trading may, on the other hand, simply be interested in different forms of technical analysis that may reveal price patterns that can be exploited in the short-run.They're not accessing some mathematical calculation for 'real' value, they're just guessing what the market, supply/demand led value will be, sometimes they get that guess wrong, but it soon becomes apparent. — Inter Alia
Nope. It doesn't work that way. The quality of the website is really irrelevant since they just want to use it to get clients. Getting clients is what's relevant. So the website can be as bad as it gets (within reason of course). The employer wouldn't give a damn in this case - so long as his results are coming. So the value isn't in the quality of the website - it's about getting clients. In the end, that's all a business cares about - sales. If that's going well, everything else can be fixed.You might sell a £1000 website to your oil tank firm, despite the fact that it's the same one as the £5 coffee shop site, but if they buy it they will be doing so expecting it to be of sufficient additional quality to justify the investment. When it turns out it's no better than the £5 coffee shop version they will not buy from you again. enough such transactions and you will either have to lower your price or raise the actual quality of your premium version. — Inter Alia
From my experience, this is not how businesses function for the most part. I won't say that there aren't such businesses, but by all means, these are not the majority, nor are they the most successful businesses. Honesty is important in business success.It is because price is dictated by supply and demand that there is an ethical problem with the actions companies take to artificially inflate demand and restrict supply (especially in essential commodities). Companies exploit the momentary gap between the consumer's estimate of value and their realisation of it, they exploit the monopolies law to artificially restrict supply, they trade in commodities without using them which artificially inflates demand. All these things have ethical consequences, but they're missed if you presume there's some 'real' value that's just a mathematical certainty. — Inter Alia
From my experience, this is not how businesses function for the most part. I won't say that there aren't such businesses, but by all means, these are not the majority, nor are they the most successful businesses. Honesty is important in business success. — Agustino
Evidence of what? I thought we were talking of artificially inflating demand (didn't know that was illegal) or artificially controlling supply. We certainly weren't talking about not meeting certain regulatory standards with regards to environmental pollution, marketing tactics, etc.Evidence — Inter Alia
Right, but that was mostly with regards to what I was responding to.You said "honesty is important in business success" and "but by all means, these are not the majority, nor are they the most successful businesses." — Inter Alia
It is because price is dictated by supply and demand that there is an ethical problem with the actions companies take to artificially inflate demand and restrict supply (especially in essential commodities). Companies exploit the momentary gap between the consumer's estimate of value and their realisation of it, they exploit the monopolies law to artificially restrict supply, they trade in commodities without using them which artificially inflates demand. All these things have ethical consequences, but they're missed if you presume there's some 'real' value that's just a mathematical certainty. — you
So out of trillions of transactions, your evidence is that there are illegal practices in 17 of them - and that's what you use to combat my claim that "these are not the majority [of business practices]".So I listed the top 17 crimes in 2015 all perpetrated by some extremely successful businesses. These are just the top crimes in one country in one year. At the very least they disprove your argument that dishonest and unethical businesses are not the successful ones, but I also think they go some way to indicating what general practice is in big business. — Inter Alia
That's a fallacy called selection bias in philosophy (or alternatively cherry picking). You've shown to be quite proficient at that. But you have to look at the overall number of crimes, vs the overall number of non-crimes which could have been crimes.If you really can't see how the fact that within seconds I can list 17 major crimes by some of the biggest companies in the world, indicates that business is not about honesty and integrity but about making as much money as possible by whatever underhand, deceptive and cutthroat means available, then there is little point in continuing. — Inter Alia
It's not about listing them, it's about telling me what the proportion is of crime to non-crime.You're basically saying that unless I can list more than a trillion crimes there's no case to answer. We should just presume the best. That's as ridiculously self-immunised an argument as your stance on religion. — Inter Alia
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