3 ms·
Why wouldn't the savings/costs be passed along to the consumer as in every other segment of the market? If I am a strawberry seller and my cost to buy strawber
by jaredklewis 7y ago
Why wouldn't the savings/costs be passed along to the consumer as in every other segment of the market?
If I am a strawberry seller and my cost to buy strawberries goes down, I can pass those savings onto the consumer or not. But my competitors will all be making the same choice, so absent collusion, if I don't lower my prices, but my competitors do, then obviously they'll take my business.
In other words, profit margins are determined by how competitive a market is, not the cost of production.
If this change goes through, I imagine that profit margins for LA developers will remain similar to whatever they are now.
- mktmkr 7y agoI think you are overstating the case that the market will pass this saving through. In reality there is some market-clearing price for a dwelling without a parking space and there's nothing the developer can do to influence it. This is the same reason that it's actually not possible to "build affordable housing" as many people demand. Yes you can build the housing but there's nothing you can do about the price it then commands.
- clairity 7y agoright, my skepticism was about the actual market dynamics and the forces that might compel pass-through savings via competition, not the econ 101 idealization of commodity markets.