Except when the price is driven low enough to not keep up with inflation.rtwngAvngr said:....when you do MORE BUSINESS, you can still make MORE MONEY in the end.
Follow along with the video below to see how to install our site as a web app on your home screen.
Note: This feature may not be available in some browsers.
Except when the price is driven low enough to not keep up with inflation.rtwngAvngr said:....when you do MORE BUSINESS, you can still make MORE MONEY in the end.
shadrack said:Except when the price is driven low enough to not keep up with inflation.
shadrack said:Except when the price is driven low enough to not keep up with inflation.
....kill competition....I don't know too many business owners able to lose money long enough to "kill" their competition.....no1tovote4 said:You would not make something and set the price lower than production cost except to kill competition.
shadrack said:....kill competition....I don't know too many business owners able to lose money long enough to "kill" their competition.....
price is usually the average cost of production
if my "exception" isn't occuring then monopolies are formingrtwngAvngr said:Your exception doesn't negate the general rule. There are always exceptions, buttbite.
man, you're rudeno1tovote4 said:Are you sure you graduated from HS?
shadrack said:man, you're rude
the examples you gave are examples of very strong network effects in the market for widely used items
shadrack said:if my "exception" isn't occuring then monopolies are forming
economies of scale help us to understand this
Now I know what you are saying and I agree.no1tovote4 said:The examples I gave were clear. This is a practice businesses use legally and often. The larger the business the more likely they will be to do this. Dell did it with small businesses creating machines at low cost. They sold theirs at an even lower cost regardless of profit until most of those small businesses were gone.
To say that this is not done under your model clearly shows that your model is extremely flawed and not based in reality.
Regardless of "very strong network effects" what is being done in Telephony is a norm in business. The goal is to be the last surviving company, by selling under cost you will find that competition is limited and companies are sold to each other at an ever-increasing pace. In time there will be few large telephone companies, they will all merge into one large conglomeration and prices will again rise to profitable levels.
shadrack said:Now I know what you are saying and I agree.
Let me make myself be more clear. A network effect business model operate under the belief that firms should care more about growing their market share than about becoming more profitable. The dot-com burst provides many example of this sort
I guess I just don't know what you're trying to say.rtwngAvngr said:Are you retarded?
shadrack said:I guess I just don't know what you're trying to say.
Price can be driven to below the rate of inflation because technology makes it possible to continue to produce at lower "real" costs. It's pretty simple really. All that is required is profits are not increasing as fast as production.
Without increased demand, there is no reason to expand. Volume is the least effective means of increasing profits. Just because you increase production doesn't mean that you increase profits because of the added costs of expansion.rtwngAvngr said:What is the significance of this fact in your mind? It in no way refutes the fact that price competition is what suppliers engage in and that this competition benefits consumers.
shadrack said:Without increased demand, there is no reason to expand. Volume is the least effective means of increasing profits. Just because you increase production doesn't mean that you increase profits because of the added costs of expansion.
Expanding without increased demand puts existing businesses in direct competition with beginning businesses. Not only must beginners compete against businesses with more equity and capital, but must do it in a low profit margin environment. Businesses require profits to succeed.
If you can get the price significantly lower, a whole new market of people may buy it that never did before. The increase in VOLUME can pay for the costs of expansion. This is fact. THis is how the world IS. Get your head of your ass****.shadrack said:Without increased demand, there is no reason to expand. Volume is the least effective means of increasing profits. Just because you increase production doesn't mean that you increase profits because of the added costs of expansion.
Expanding without increased demand puts existing businesses in direct competition with beginning businesses. Not only must beginners compete against businesses with more equity and capital, but must do it in a low profit margin environment. Businesses require profits to succeed.
Natural monopoly will occur when existing businesses are in direct competition with new businesses. Economies of scale works in different ways....through monopoly or through many participants in the marketplace. I would rather it not be through monopoly. And in the low profit margin environment, what is the incentive for a person to enter into business?no1tovote4 said:Sounds like simple economic fact, the new businesses may be getting into a market that has already been filled. What is the import of this in your mind?
shadrack said:Natural monopoly will occur when existing businesses are in direct competition with new businesses. Economies of scale works in different ways....through monopoly or through many participants in the marketplace. I would rather it not be through monopoly. And in the low profit margin environment, what is the incentive for a person to enter into business?
I do? I kind of had the impression that supply-sider neocons, like yourself, wanted to do that.rtwngAvngr said:I know you and the europlibs want to cut all the brown people of the earth out of the modern economy. Is that moral?
Well, let me say it this way.....What ability does a person have to start a business in a low profit margin environment in direct competition with existing businesses?no1tovote4 said:If they can improve the product or fill a niche that has not yet been filled they will be successful. They have the same incentive as we have always had, to make a profit. However trying to bust into an already filled niche without providing higher quality or lower price is simply impossible and a bad business choice.