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Does anyone know, by what logic are the auctions price fixing? Generally they seem like one of the fairest ways to determine a price - are they doing something
by sbov 11y ago
Does anyone know, by what logic are the auctions price fixing? Generally they seem like one of the fairest ways to determine a price - are they doing something odd in their auctions? Or are they just grasping at straws?
- tyingq 11y agoThe auctions are run by the dominant leader in the space (Ocean Spray). Supposedly they are selling off "excess product". The accusation is that they are selling with a starting bid that is lower than the actual cost to make the cranberry concentrate...on purpose, to manipulate the market. Typically called predatory dumping.
- scottkduncan 11y agoBut it is still an auction, right? As in, if the starting price is less than the market price it should still get bid higher and there won't be a market irregularity?
- cptskippy 11y agoIt sounds like the demand for is juice low due to sugar labeling requirements. The demand for the husks is high however and the left over juice is a byproduct of harvesting the cranberry husks for craisans. So what is the right answer? Dump the juice in the river? That's like throwing away money since it seems like someone is willing to buy it.
- morgante 11y agoI don't see how this can be considered predatory though. It's still an auction. It should sell at the market price. In theory, they should be able to open their action at $1 and that would be totally fair. If they were selling at $1 that would be a different matter, but the auction structure should guarantee that goods aren't sold at substantially below-market.
- tyingq 11y agoI assume that's why it's currently just an accusation and not a given. It is still possible to control pricing with an auction if you dump enough product with no reserve price...basic supply/demand. A cynic might say they chose the auction route specifically to avoid the appearance of dumping, but ensured they would dump enough volume to get the effect they wanted. Nobody seems to be debating that the sales price is currently lower than the actual cost to produce the product.
- jtchang 11y agoThe idea is to force other people out of the market because they can't continue to sell at your price. If Apple gave away their iPhone for free (and could sustain that with the cash they have) they could drive every other phone manufacturer out of the market (assuming everyone wanted iPhones). This works better if the product is homogenous. In web products maybe Gmail is an example? Hard to compete with free and the # of features they have. It's hard to come up with a better example because features is a big differentiator. Once your competitors go out of business you're the only guy left in town so you raise your prices to the moon and profit.
- thaumasiotes 11y ago> Once your competitors go out of business you're the only guy left in town so you raise your prices to the moon and profit. Has there ever been a case of this happening?
- ceejayoz 11y agohttps://en.wikipedia.org/wiki/Monopoly#Historical_monopolies https://en.wikipedia.org/wiki/Monopoly#Historical_monopolies
- thaumasiotes 11y agoPlease identify something in the article that matches this description.
- ceejayoz 11y ago> De Beers is well known for its monopoloid practices throughout the 20th century, whereby it used its dominant position to manipulate the international diamond market. The company used several methods to exercise this control over the market. Firstly, it convinced independent producers to join its single channel monopoly, it flooded the market with diamonds similar to those of producers who refused to join the cartel, and lastly, it purchased and stockpiled diamonds produced by other manufacturers in order to control prices through limiting supply.