Economics v. business --The Huck incident

[shadrack]

....when you do MORE BUSINESS, you can still make MORE MONEY in the end.

Except when the price is driven low enough to not keep up with inflation.

 

[no1tovote4]

Except when the price is driven low enough to not keep up with inflation.

This would only happen if there was competition that was setting those low prices. You would not make something and set the price lower than production cost except to kill competition.

 

[rtwngAvngr]

Except when the price is driven low enough to not keep up with inflation.

Your exception doesn't negate the general rule. There are always exceptions, buttbite.

 

[shadrack]

You would not make something and set the price lower than production cost except to kill competition.

....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

 

[no1tovote4]

....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

Then you never studied history or economics. It is what Anti trust laws were created for. Large Monopolies were created by just this practice.

Every phone company that is currently doing business is doing this as we speak. I am in a great position to know I work for one of them.

Microsoft does this as well, why do you think they ended defending themselves against Anti-trust laws?

In other words, you are talking about something you obviously know nothing about at this moment. Are you sure you graduated from HS?

 

[shadrack]

Your exception doesn't negate the general rule. There are always exceptions, buttbite.

if my "exception" isn't occuring then monopolies are forming

economies of scale help us to understand this

 

[shadrack]

Are you sure you graduated from HS?

man, you're rude

the examples you gave are examples of very strong network effects in the market for widely used items

 

[no1tovote4]

man, you're rude

the examples you gave are examples of very strong network effects in the market for widely used items

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.

 

[rtwngAvngr]

if my "exception" isn't occuring then monopolies are forming

economies of scale help us to understand this

Of course it IS occuring. See no1's stuff.

This does not dispute the fact that firms drive prices down to compete, increase volume, and take market share.

Are you retarded?

 

[shadrack]

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.

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

 

[no1tovote4]

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

It is usually the long view that companies are taking when they begin this course. They believe that having the market share will increase profits ultimately. Companies that will not compete with them when they lower their prices will end up out of business as well as many that do try. The business practice creates whole industries. As a contractor I once worked with a "Real Estate" company that dealt solely with Cable Companies that succumbed to this practice by the largest of the Cable Companies. Corporate Pirates....

 

[shadrack]

Are you retarded?

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.

 

[rtwngAvngr]

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.

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]

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.

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.

 

[no1tovote4]

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.

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?

 

[rtwngAvngr]

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.

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****.

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.

Yep. Life's a bitch. Price competition ultimately serves the consumer. And I repeat, please extract your head from your posterior.

I know you and the europlibs want to cut all the brown people of the earth out of the modern economy. Is that moral?

 

[shadrack]

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?

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]

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?

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.

 

[shadrack]

I know you and the europlibs want to cut all the brown people of the earth out of the modern economy. Is that moral?

I do? I kind of had the impression that supply-sider neocons, like yourself, wanted to do that.

 

[shadrack]

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.

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?

rightwinger brings up "brown" people, but it seems to me anyone could take what I've said and apply it to developing nations. Developing nation's mostly have the ability to produce a uniform, generic product which inherently is low in price, providing little profit. If developing nations could produce a unique product, they would receive a premium price for that product. But, of course, they would have to find the capital and develop the knowledge. Coffee bean producers in South America is an example. Would the solution to their problem be "find a niche". They don't have the capital. Besides, anything they can do will put them into direct competition with an existing business.