3 ms·

The receiver of the surplus (Walmart vs consumers) is kinda important...

SilasX 9y ago
First of all, consumers get lower prices at Walmart, it doesn't just have the effect of higher profits. Second, the real danger in both cases (though people only see it in one, hence my point) is that you're killing off the OEMs this way. No one wants to bring innovative new products to market if some monopsonist will just force them down to the mandated n% profits.
- haltingthoughts 9y ago
  Fair enough on the passthrough to consumers.
- zaccus 9y ago
  Nope. 1) Walmart doesn't pass savings to consumers, it passes them to shareholders, as they have a fiduciary obligation to do. The "lower prices" thing is just marketing; WM's prices aren't particularly low once they've driven away their competition. 2) If drug companies want to charge a R&D premium for bleeding-edge innovative products, that's fine. What's not fine is price gouging consumers for drugs they depend on to live, that are not innovative in 2017, and that are cheaply available in other countries, like the EpiPen.
  - johncolanduoni 9y ago
    Post-patent drugs usually have insane prices due to reasons outside of what can be effectively combatted by the bargaining power of universal healthcare (e.g. regulatory capture in the case of EpiPen). That tactic is rarely necessary once generics enter the mix, as long as nothing is artificially preventing them from getting to market.
  - Dylan16807 9y ago
    Walmart does not in any way, shape, or form have an obligation to pass savings directly onto shareholders instead of reinvesting it in customer satisfaction.
    - zaccus 9y ago
      As a publicly traded company, yes they do. Customer satisfaction only matters to the extent that it increases shareholder value.
      - Dylan16807 9y ago
        > Customer satisfaction only matters to the extent that it increases shareholder value. Which it does, so it is a completely valid option. There is absolutely nothing forcing them to pick any particular use for the money. Both uses benefit the company in some way. Both uses are fine. It's not like they're burning it.
        zaccus 9y ago
        It may, it may not. If not lowering prices benefits shareholders more, then that is what they have to do. >There is absolutely nothing forcing them to pick any particular use for the money. Except this legal precedent right here: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
- pwthornton 9y ago
  Walmart sells cheap stuff, it doesn't sell stuff cheaply. There is a very important distinction. It works hard to lower supplier and employee costs not to benefit consumers but to prop up their own margins.

First of all, consumers get lower prices at Walmart, it doesn't just have the effect of higher profits. Second, the real danger in both cases (though people only see it in one, hence my point) is that you're killing off the OEMs this way. No one wants to bring innovative new products to market if some monopsonist will just force them down to the mandated n% profits.

haltingthoughts 9y ago
Fair enough on the passthrough to consumers.
zaccus 9y ago
Nope. 1) Walmart doesn't pass savings to consumers, it passes them to shareholders, as they have a fiduciary obligation to do. The "lower prices" thing is just marketing; WM's prices aren't particularly low once they've driven away their competition. 2) If drug companies want to charge a R&D premium for bleeding-edge innovative products, that's fine. What's not fine is price gouging consumers for drugs they depend on to live, that are not innovative in 2017, and that are cheaply available in other countries, like the EpiPen.
- johncolanduoni 9y ago
  Post-patent drugs usually have insane prices due to reasons outside of what can be effectively combatted by the bargaining power of universal healthcare (e.g. regulatory capture in the case of EpiPen). That tactic is rarely necessary once generics enter the mix, as long as nothing is artificially preventing them from getting to market.
- Dylan16807 9y ago
  Walmart does not in any way, shape, or form have an obligation to pass savings directly onto shareholders instead of reinvesting it in customer satisfaction.
  - zaccus 9y ago
    As a publicly traded company, yes they do. Customer satisfaction only matters to the extent that it increases shareholder value.
    - Dylan16807 9y ago
      > Customer satisfaction only matters to the extent that it increases shareholder value. Which it does, so it is a completely valid option. There is absolutely nothing forcing them to pick any particular use for the money. Both uses benefit the company in some way. Both uses are fine. It's not like they're burning it.
      - zaccus 9y ago
        It may, it may not. If not lowering prices benefits shareholders more, then that is what they have to do. >There is absolutely nothing forcing them to pick any particular use for the money. Except this legal precedent right here: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
pwthornton 9y ago
Walmart sells cheap stuff, it doesn't sell stuff cheaply. There is a very important distinction. It works hard to lower supplier and employee costs not to benefit consumers but to prop up their own margins.