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Production cost is a primary factor in pricing in industries having the characteristic of "perfect competition". For example, in the farming industry, the price

by Pyxl101 11y ago

Production cost is a primary factor in pricing in industries having the characteristic of "perfect competition". For example, in the farming industry, the price of wheat is primarily determined by production cost, while influenced by other factors. You can read about characteristics associated with perfect competition on Wikipedia: https://en.wikipedia.org/wiki/Perfect_competition#Basic_structural_characteristics https://en.wikipedia.org/wiki/Perfect_competition#Basic_stru... If drug use and drug-making were both made fully legal, or comparable legal as alcohol-making and alcohol-using, then the industry would rapidly approach perfect competition for certain classes of categories (e.g., pharmaceutical recreational drugs).

oldmanjay 11y ago
Alcohol is a terrible example here. Many premium products already exist in the marketplace with no clear connection between production cost and price. You could possibly build a case with tobacco but you'd have to ignore the cigar market, which similarly has a large premium market segment. It seems unlikely that other recreational drugs would be different.
Trundle 11y ago
Wheat is not a good comparison because it's mostly not consumer facing. Consumers care for more things in their purchases than just the raw good. Your alcohol example IS a good example. Consumers aren't just buying a beverage that intoxicates them that doesn't taste terrible. They pay a premium for brand, image, and to a large extent placebo quality. The cost of manufacturing for most alcoholic beverages has little to do with the final price. Hell, even look at legal, non-recreational drugs. There can be an identical generic version. There can be an accredited medical professional standing right there saying "they're the same thing" and people will still opt for name brand. I'm certain that if drugs were legalised, all that extra cost from being illegal would go straight in to marketing budgets and people will be buying the lsd equivalent of $300 bottles of wine or vodka that comes in creative packaging.
- mdpopescu 11y ago
  Er... did you just say "people don't buy based primarily on price"? Because that contradicts pretty much everybody else... (Yes, brands have an influence, people buy Vertu phones, but Walmart has a lot more customers.)
  - Trundle 11y ago
    Just reviewed my message and no, I don't believe I did. Do let me know if I missed it though!
  - sooheon 11y ago
    No, he and you and I and everyone else knows that all things being equal, price determines purchasing decisions. He just also went on to list how in many ways, all things are not held equal.

by Pyxl101 11y ago

oldmanjay 11y ago

Alcohol is a terrible example here. Many premium products already exist in the marketplace with no clear connection between production cost and price. You could possibly build a case with tobacco but you'd have to ignore the cigar market, which similarly has a large premium market segment. It seems unlikely that other recreational drugs would be different.

Trundle 11y ago

Wheat is not a good comparison because it's mostly not consumer facing. Consumers care for more things in their purchases than just the raw good. Your alcohol example IS a good example. Consumers aren't just buying a beverage that intoxicates them that doesn't taste terrible. They pay a premium for brand, image, and to a large extent placebo quality. The cost of manufacturing for most alcoholic beverages has little to do with the final price. Hell, even look at legal, non-recreational drugs. There can be an identical generic version. There can be an accredited medical professional standing right there saying "they're the same thing" and people will still opt for name brand. I'm certain that if drugs were legalised, all that extra cost from being illegal would go straight in to marketing budgets and people will be buying the lsd equivalent of $300 bottles of wine or vodka that comes in creative packaging.

mdpopescu 11y ago
Er... did you just say "people don't buy based primarily on price"? Because that contradicts pretty much everybody else... (Yes, brands have an influence, people buy Vertu phones, but Walmart has a lot more customers.)
- Trundle 11y ago
  Just reviewed my message and no, I don't believe I did. Do let me know if I missed it though!
- sooheon 11y ago
  No, he and you and I and everyone else knows that all things being equal, price determines purchasing decisions. He just also went on to list how in many ways, all things are not held equal.