I find amusing that while everybody claims to know how capitalism works, they still get wrong.
Repeat with me:
The only relationships between costs and price is that, IF MY PRICE GOES BELOW MY COSTS, I GO BROKE.
If I get a product for free, I can sell it for $1 or $1.000.000. The decission will be based in which price gives me more profits (perhaps at $1 I get so many customers that it offsets the lower prices, in the other hand it will mean that I will have bigger production/distribution costs). With many products, market share is very affected by price, but that is not universal (you only get one dose of a vaccine, no matter how cheap the second one is; no matter how expensive is it, you will a bottle of water if you are in the middle of the desert).
The theory says that if I get a big difference between price and cost (-> profit) then other bussinesmen will catch up and enter my bussiness, leading to competition and eventually lowering prices. Of course, what is not usually said is the long list of "exceptions":
*) My product is unique -let it be by its properties, by copyright or even by marketing/branding-; nobody can copy it.
*) Time to market is big: even if the other bussinesmen begin trying to catch me today, they will spend years until they get a product ready (think of designing a car, or a full new OS).
*) Investment is big: bussinesmen do not have enough capital to invest as they should in this market, if they ask for loans the interest to pay will be a significant disavantage against me. And when if they finally get to do it, I am in a good position to dump prices so they can not recoup their investments, let alone get benefits (this one works better when coupled with the previous ones, see nuclear electricity).
bill rancic nflx jennifer hudson chicago blackhawks dick clark elie wiesel giuliana rancic
কোন মন্তব্য নেই:
একটি মন্তব্য পোস্ট করুন