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I think the "monopsony==inefficient market" argument is a fig leaf for the shibboleth that state economic actors are somehow "tainted" because they're not "priv

I think the "monopsony==inefficient market" argument is a fig leaf for the shibboleth that state economic actors are somehow "tainted" because they're not "private" enterprises. If a pharmaceutical firm were "negotiated" (tortured?) below their break-even somehow by state actors, they would simply fold. The entire concept of "below efficiency levels" is questionable here.

harryh 11y ago
"below efficiency levels" isn't some sort of moral statement, it's a mathematical one. It's not a question of moving sellers below their break-even point (you're correct that would obviously never happen). It's about transferring producer surplus to consumer surplus and introducing deadweight loss into the system. https://en.wikipedia.org/wiki/Monopsony#Welfare_implications https://en.wikipedia.org/wiki/Monopsony#Welfare_implications explains it pretty clearly for the example of labor.
- dalke 11y ago
  "A mathematical one" in a simplified analysis which assumes a rational actor model which doesn't model what people actually do. Or if you want to use the model, the deadweight loss in your evaluation can instead be interpreted as the price that people are willing to pay for the good feelings of knowing that everyone in the country has accessible and affordable basic health care.
  - harryh 11y ago
    > assumes a rational actor model which doesn't model what people actually do Sure, but in the case of drug prices in countries with national health systems we don't really have any reason to think that the model doesn't reflect reality. > the deadweight loss in your evaluation can instead be interpreted Yes, this is exactly my point! The science of economics makes no judgement about the relative moral values at play here. That may very well be a tradeoff people want to make. Or it might not. Economics doesn't comment on that question one way or another, it nearly provides data on the practical outcome of the decision.
    - dalke 11y ago
      Which is why I wrote: Hence the questions of what "efficient" and "abuse" means, which go into the pricing negotiations.
- nickbauman 11y ago
  People don't consume health care as a typical commodity. Choices you make around health care are existential. It's not just a cost calculation. So without a state actor you would still not have the behavior of an efficient market.
deleted 11y ago
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scotty79 11y ago
Besides. Even if companies are forced below their break even point by strong consumers so that they need to stop selling to some market and even if they die because of it then it's still ok. Companies unlike people should be allowed to die. That's one of the ways market evolves. One of the way market avoids local optima. Companies dying because they cannot provide the market at the prices market expects is the normal thing. People dying because cartel prices essential good above what consumers can afford is not.

harryh 11y ago

"below efficiency levels" isn't some sort of moral statement, it's a mathematical one. It's not a question of moving sellers below their break-even point (you're correct that would obviously never happen). It's about transferring producer surplus to consumer surplus and introducing deadweight loss into the system. https://en.wikipedia.org/wiki/Monopsony#Welfare_implications https://en.wikipedia.org/wiki/Monopsony#Welfare_implications explains it pretty clearly for the example of labor.

dalke 11y ago
"A mathematical one" in a simplified analysis which assumes a rational actor model which doesn't model what people actually do. Or if you want to use the model, the deadweight loss in your evaluation can instead be interpreted as the price that people are willing to pay for the good feelings of knowing that everyone in the country has accessible and affordable basic health care.
- harryh 11y ago
  > assumes a rational actor model which doesn't model what people actually do Sure, but in the case of drug prices in countries with national health systems we don't really have any reason to think that the model doesn't reflect reality. > the deadweight loss in your evaluation can instead be interpreted Yes, this is exactly my point! The science of economics makes no judgement about the relative moral values at play here. That may very well be a tradeoff people want to make. Or it might not. Economics doesn't comment on that question one way or another, it nearly provides data on the practical outcome of the decision.
  - dalke 11y ago
    Which is why I wrote: Hence the questions of what "efficient" and "abuse" means, which go into the pricing negotiations.
nickbauman 11y ago
People don't consume health care as a typical commodity. Choices you make around health care are existential. It's not just a cost calculation. So without a state actor you would still not have the behavior of an efficient market.

deleted 11y ago

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scotty79 11y ago

Besides. Even if companies are forced below their break even point by strong consumers so that they need to stop selling to some market and even if they die because of it then it's still ok. Companies unlike people should be allowed to die. That's one of the ways market evolves. One of the way market avoids local optima. Companies dying because they cannot provide the market at the prices market expects is the normal thing. People dying because cartel prices essential good above what consumers can afford is not.