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How would walmart raising their prices by 20% cause their employees to go work for google? Why would google even give them job offers?

by Buge 9y ago

conanbatt 9y ago
If they raise their prices, people buy less, so profits are less, so its value as investment goes down, so it gets disinvested. Where would that money go? to any company with higher returns, in this case, Google.
- AnthonyMouse 9y ago
  > If they raise their prices, people buy less, so profits are less, so its value as investment goes down, so it gets disinvested. Where would that money go? to any company with higher returns, in this case, Google. You're assuming that Google has higher returns. Higher margins doesn't inherently mean higher risk-adjusted returns. The higher margin company could be higher risk or have higher fixed up-front capital costs.
  - conanbatt 9y ago
    If it was in equilibrium before the tax, the addition of the tax would favor google.
    - AnthonyMouse 9y ago
      > If it was in equilibrium before the tax, the addition of the tax would favor google. If it was in equilibrium then they would both have the same margins. Something has to be different or everything is the same. And by far the most common reason for a company to have higher margins is that it has higher risk. Otherwise the investors would already be investing only in the business model that makes more money without any countervailing disadvantage whatsoever, regardless of the tax.
      - conanbatt 9y ago
        > If it was in equilibrium then they would both have the same margins. Something has to be different or everything is the same. You can have different margins and different volumes, with the same rate of profits for capital invested.
        AnthonyMouse 9y ago
        > You can have different margins and different volumes, with the same rate of profits for capital invested. Having the same historical returns isn't the same as having the same risk-adjusted returns. Having higher margins is a risk unto itself. A low-volume high-margin store might have the same total profits as a high-volume low-margin store, but move them next to each other selling equivalent products and you know which one is going out of business.

How would walmart raising their prices by 20% cause their employees to go work for google? Why would google even give them job offers?

by Buge 9y ago

How would walmart raising their prices by 20% cause their employees to go work for google? Why would google even give them job offers?

conanbatt 9y ago

If they raise their prices, people buy less, so profits are less, so its value as investment goes down, so it gets disinvested. Where would that money go? to any company with higher returns, in this case, Google.

AnthonyMouse 9y ago
> If they raise their prices, people buy less, so profits are less, so its value as investment goes down, so it gets disinvested. Where would that money go? to any company with higher returns, in this case, Google. You're assuming that Google has higher returns. Higher margins doesn't inherently mean higher risk-adjusted returns. The higher margin company could be higher risk or have higher fixed up-front capital costs.
- conanbatt 9y ago
  If it was in equilibrium before the tax, the addition of the tax would favor google.
  - AnthonyMouse 9y ago
    > If it was in equilibrium before the tax, the addition of the tax would favor google. If it was in equilibrium then they would both have the same margins. Something has to be different or everything is the same. And by far the most common reason for a company to have higher margins is that it has higher risk. Otherwise the investors would already be investing only in the business model that makes more money without any countervailing disadvantage whatsoever, regardless of the tax.
    - conanbatt 9y ago
      > If it was in equilibrium then they would both have the same margins. Something has to be different or everything is the same. You can have different margins and different volumes, with the same rate of profits for capital invested.
      - AnthonyMouse 9y ago
        > You can have different margins and different volumes, with the same rate of profits for capital invested. Having the same historical returns isn't the same as having the same risk-adjusted returns. Having higher margins is a risk unto itself. A low-volume high-margin store might have the same total profits as a high-volume low-margin store, but move them next to each other selling equivalent products and you know which one is going out of business.