4 ms·

>at the highest price the market will bear (meaning that some people can't afford them) If anyone can't afford your drugs, this is an issue of insufficiently o

>at the highest price the market will bear (meaning that some people can't afford them) If anyone can't afford your drugs, this is an issue of insufficiently optimized price discrimination (as long as what they can afford is above the marginal cost of manufacture). There's often manufacturer's coupons for exactly this reason - make a compelling case about what you can afford, and the manufacturer will drop prices until you can give them some money instead of none.

perl4ever 8y ago
I'm no economist, but I strongly feel perfect price discrimination would be a rather terrible thing. You seem to be implying that it would be "sufficient". Imagine if the water you drink was priced at the maximum amount you would be willing to pay not to die of thirst. This would palpably be a terrible thing. All of us go around every day buying things that we think are worth substantially more to us than the money we pay. It seems to me like this is the whole value proposition of capitalism for human beings. I have always thought that free markets are useful, but I think that is only the case if they tend to drive producer surplus to zero and consumer surplus to the maximum. If there were no consumer surplus, as with perfect discrimination, then I don't see the point of economic activity. I sort of thought (because I read it somewhere) that orthodox economic theory implied that perfect free markets should drive economic profits of businesses to zero. And profits should be roughly equivalent to producer surplus. So we shouldn't be balancing consumer and producer surplus, let alone allocating the surplus all to producers.
- ThrustVectoring 8y ago
  I agree with you there, lots of things should get competed down to low or no producer surplus. The problem is that you have to pick one of price discrimination, unaffordable medication, or unavailable medication. If you don't allow for price discrimination, then many new medications cost so much per patient with the relevant disease that your choices are to have an unaffordable average price charged to everyone, or just don't make the medication in the first place and let nobody have it. With price discrimination, you can keep the average price high by gouging those who can pay, and using that to subsidize those of more modest means. There's no choice here that's an unalloyed good. There's always tradeoffs. Price discrimination is just sometimes the lesser of several evils.
taneq 8y ago
Well that's one way to describe "any lifesaving treatment costs the sum total of resources that you can command".
- ThrustVectoring 8y ago
  It's kinder than extending treatment on credit and then doing price discrimination via bankruptcy proceedings.

perl4ever 8y ago

I'm no economist, but I strongly feel perfect price discrimination would be a rather terrible thing. You seem to be implying that it would be "sufficient". Imagine if the water you drink was priced at the maximum amount you would be willing to pay not to die of thirst. This would palpably be a terrible thing. All of us go around every day buying things that we think are worth substantially more to us than the money we pay. It seems to me like this is the whole value proposition of capitalism for human beings. I have always thought that free markets are useful, but I think that is only the case if they tend to drive producer surplus to zero and consumer surplus to the maximum. If there were no consumer surplus, as with perfect discrimination, then I don't see the point of economic activity. I sort of thought (because I read it somewhere) that orthodox economic theory implied that perfect free markets should drive economic profits of businesses to zero. And profits should be roughly equivalent to producer surplus. So we shouldn't be balancing consumer and producer surplus, let alone allocating the surplus all to producers.

ThrustVectoring 8y ago
I agree with you there, lots of things should get competed down to low or no producer surplus. The problem is that you have to pick one of price discrimination, unaffordable medication, or unavailable medication. If you don't allow for price discrimination, then many new medications cost so much per patient with the relevant disease that your choices are to have an unaffordable average price charged to everyone, or just don't make the medication in the first place and let nobody have it. With price discrimination, you can keep the average price high by gouging those who can pay, and using that to subsidize those of more modest means. There's no choice here that's an unalloyed good. There's always tradeoffs. Price discrimination is just sometimes the lesser of several evils.

taneq 8y ago

Well that's one way to describe "any lifesaving treatment costs the sum total of resources that you can command".

ThrustVectoring 8y ago
It's kinder than extending treatment on credit and then doing price discrimination via bankruptcy proceedings.