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That’s true, but the cell towers are probably going to be of a similiar cost in India vs US. Lower (because wages are lower) but similar because the actual equi
by mruts 8y ago
That’s true, but the cell towers are probably going to be of a similiar cost in India vs US. Lower (because wages are lower) but similar because the actual equipment is going to be the same price.
PPP is only relevent for things that have different prices in different countries (housing, food, etc). There are many things that cost roughly the same wherever you are: oil, macbooks, cell towers, etc.
As a general rule, the easier something is to arbitrage, the less PPP matters. The cost of arbitrage includes transport costs, taxes, and depreciation schedules (vegetables would be cheaper in India vs US because they are hard to transport, for example).
Of course this is only relevent if the US companies aren’t making crazy margins (I don’t personally know, but I suspect it’s possible).
- AlotOfReading 8y agoIs the bulk of cell tower cost going towards equipment? My understanding was that a significant chunk went towards labor/construction costs and land rent, both of which are probably much cheaper in India.
- denzil_correa 8y agoYou are missing the core point - the income for an average person in India is significantly lower than the US or UK. Therefore, you can not directly compare prices of products across countries regardless of the costs of the product itself. Some metrics to look at GNI(PPP) Per Capita in Int$ : India - 6,980 / UK - 42,560 / USA - 60,200 [0] GDP (nominal) per capita in US$ (World Bank) : India - 1,940 / UK - 39.720 / USA - 59,532 [1] One of those countries, is not like the other two. [0] https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)... [1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
- mruts 8y agoAre you suggesting that someone would sell a product for a lower price than what it costs just because people are poor where he sells it? PPP isn’t magic and you have to understand why some products are cheaper in 3rd world countries and why some products are the same price or even more expensive. It’s about arbitrage. Just quoting some PPP stat from wikipedia is irrelevent and missing the point. Why do you think PPP is different in different places? It’s not some magic wand you can just wave around.
- denzil_correa 8y ago> Are you suggesting that someone would sell a product for a lower price than what it costs just because people are poor where he sells it? Yes and it happens regularly. One example : Apple Music - USA $9.99 per month, UK £9.99 per month, India 1.74 US$ / 1.32 GBP
- abbe_k 8y agoThe cell tower cost is not similar at all. I also used to think that the actual telecom equipment was the biggest cost and then your statement would be true. But generally installation cost and raising a tower is many times more expensive than the equipment. Digging down power and fiber to a tower is not cheap.