4 ms·

I am sorry, this doesn't make any sense to me. If "people refuse to pay more for this", it means there's either over-supply of service at the current price-poin

by dexen 8y ago

I am sorry, this doesn't make any sense to me. If "people refuse to pay more for this", it means there's either over-supply of service at the current price-point, or there are easily accessible, low-cost alternative services. There is no third way, barring country-wide air-tight collusion of all transportation buyers, which is an unrealistic scenario.

aaomidi 8y ago
You don't understand this do you? When you've spent a ton of capital, have loans to pay, paying insurance, etc. You are not in a position to negotiate. It doesn't make sense because we keep getting fed a simplistic view of "supply vs demand." That is a general trend, but not a rule. If you know you have to work to keep your means of survival, you don't negotiate. We've seen salaries/bonuses/rates slowly go up, but there's always some other sucker who has to be able to pay their bills. Even if this means stuff getting to their destination later than usual. A lot of truck businesses are owner operated, they simply don't have the means to say "no."
- dexen 8y ago
  Every concern you mention is true for both sides of the market - seller and buyer. The buyer has spent a ton of capital on infrastructure and marketing, has loans and other bills to pay, and also has to provide service to their customers at good conditions - and timely - lest the customers go to their competitors. The buyer can't simply wait out indefinitely. Unless there's a significant over-supply of the sellers. In which case the buyer can wait out any given seller, and get better deal from the next seller that comes around. >If you know you have to work to keep your means of survival, you don't negotiate. The very same concern goes for the buyers. They are just as well under the pressure of contractual deadlines and bills to pay. I am sorry, but your post strikes me as example of "magical thinking" - "there must be something special about the owner-operated transport businesses". Yet nobody has provided any serious arguments towards that. Just for the sake of contrast - you could imagine brain surgeons in the very same predicament. Suppose there were plenty of brain surgeons on the market - their prices (wages) would be very low, sometimes even below the costs incurred. No matter how pressed a patient would be for a life-saving operation, if there were multiple surgeons fiercely competing for this work, the price would be low. The only reasons the brain surgeons are earning well is that the demand for service is higher than the supply - and there's little to no alternatives to a life-saving surgery. You may balk at the example of highly skilled specialist surgeon, but it's true story of the eastern block [i.e., communist] countries, where supply of doctors was high, and the demand - which was only the state-funded healthcare - was fixed[1]. The surgeons earned rather low wages, and many supported themselves with bribes for access and expedited treatment. Please don't tell us there's been "driver shortage for 10+ years". It's just fantasy. -- [1] from the layman's POV "demand" for surgeries was high and nearly insatiable, but from the economics POV, demand with willingness to pay was fixed by the centralized healthcare planners.

by dexen 8y ago

aaomidi 8y ago

You don't understand this do you? When you've spent a ton of capital, have loans to pay, paying insurance, etc. You are not in a position to negotiate. It doesn't make sense because we keep getting fed a simplistic view of "supply vs demand." That is a general trend, but not a rule. If you know you have to work to keep your means of survival, you don't negotiate. We've seen salaries/bonuses/rates slowly go up, but there's always some other sucker who has to be able to pay their bills. Even if this means stuff getting to their destination later than usual. A lot of truck businesses are owner operated, they simply don't have the means to say "no."

dexen 8y ago
Every concern you mention is true for both sides of the market - seller and buyer. The buyer has spent a ton of capital on infrastructure and marketing, has loans and other bills to pay, and also has to provide service to their customers at good conditions - and timely - lest the customers go to their competitors. The buyer can't simply wait out indefinitely. Unless there's a significant over-supply of the sellers. In which case the buyer can wait out any given seller, and get better deal from the next seller that comes around. >If you know you have to work to keep your means of survival, you don't negotiate. The very same concern goes for the buyers. They are just as well under the pressure of contractual deadlines and bills to pay. I am sorry, but your post strikes me as example of "magical thinking" - "there must be something special about the owner-operated transport businesses". Yet nobody has provided any serious arguments towards that. Just for the sake of contrast - you could imagine brain surgeons in the very same predicament. Suppose there were plenty of brain surgeons on the market - their prices (wages) would be very low, sometimes even below the costs incurred. No matter how pressed a patient would be for a life-saving operation, if there were multiple surgeons fiercely competing for this work, the price would be low. The only reasons the brain surgeons are earning well is that the demand for service is higher than the supply - and there's little to no alternatives to a life-saving surgery. You may balk at the example of highly skilled specialist surgeon, but it's true story of the eastern block [i.e., communist] countries, where supply of doctors was high, and the demand - which was only the state-funded healthcare - was fixed[1]. The surgeons earned rather low wages, and many supported themselves with bribes for access and expedited treatment. Please don't tell us there's been "driver shortage for 10+ years". It's just fantasy. -- [1] from the layman's POV "demand" for surgeries was high and nearly insatiable, but from the economics POV, demand with willingness to pay was fixed by the centralized healthcare planners.