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An economist would say that when considering buying this machinery the farmer would also consider the cost and availability of repairs and that the competition

An economist would say that when considering buying this machinery the farmer would also consider the cost and availability of repairs and that the competition in the machinery market (the primary market) would police the secondary market for repairs. In reality, this kind of policing is hard to come by because of the time and expense of figuring out which company has the cheapest lifecycle1 costs for the equipment (do you figure out how much the blades will cost when you buy the razor). But the real reason is that lots of people just don't think about the long-term costs attached to a purchase.

bduerst 7y ago
When buying, if there are contractual strings attached to the use of the asset then it's more of a lease purchase than actual asset purchase. As it is now, farmers that are purchasing the asset are saying they want to use the asset as they deem fit, including repairs.
- Balanceinfinity 7y ago
  agreed. But when they purchased the machines, they should have looked at the services terms and taken that into account when making their purchases. If there's competition in the market (no idea) then presumably someone would try to beat its competitors by offering a better service option (such as unlocked diagnostics). This issue went to the supreme court on the question of whether a manufacturer could "monopolize" its aftermarket. https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Technical_Services,_Inc https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Tec....
  - ShroudedNight 7y ago
    Link is missing the trailing period: https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Technical_Services,_Inc. https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Tec.... FWIW, I had to add an extra period at the end to get the original one to get included as part of the link.
    - detaro 7y ago
      another possible trick is urlencoding the dot as %2E: https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Technical_Services,_Inc%2E https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Tec...
    - Balanceinfinity 7y ago
      Thanks
- aeternum 7y ago
  The problem is that almost every new device now includes these hidden contractual strings. Your phone will only run software signed by the developer, same with your smart tv, chromebook, your car, many new refrigerators, etc. As a consumer, it is very hard to determine the restrictions that this imposes on ability to fix as it varies widely between devices. I haven't seen any manufacturer label these items as a lease nor be upfront with the support lifetime.
Crashbat 7y ago
I'm pretty sure the farmers know very well the lifecycle costs of their heavy machinery, the problem isn't ill-informed consumers. The problem is the time as well as expense of repairs is controlled by the manufacturers. The razor example isn't analogous here, you can pretty much plan for when you need new blades. A farmer can't predict when the equipment will break down.
- Balanceinfinity 7y ago
  Lifecycle costs of machinery are pretty standard (especially after whatever warranty expires). And, of course, the farmer can avoid the risks of these costs by simply extending the warranty - then all the risk is on the warranty provider. But the homework the farmer (or any purchaser - this same issue arises for medical imaging equipment, cars, busses, etc) should do is what will the service market looklike for his or her equipment after warranty. It's not easy to do this research - but the flip side is this: if the manufacturers have to sell unlocked service, they will charge more for the original sale. Economically speaking that may be better because the costs will be clearer.
  - larkost 7y ago
    My understanding is that it is not only cost that is problematic, but rather time. If you need to harvest, then you need to harvest now, not in 2 weeks. Whereas the dealer repair shops are not always available in those time frames. Especially not if you are in the field and have to unclog something, and then need a dealer-only code to re-enable the in-failure-mode part.
    - spamizbad 7y ago
      Your understanding is correct. It doesn't matter if the equipment is free: if it breaks down during a planting window or harvest season you stand to lose significant amounts of money. Dealers may not have the parts, may not be able to provide the repair without calling in a technician, or may be located far away. People are talking about R2R making things more expensive but the opposite can be true: service centers can often be lossy operations, so if you have to service machines at a lower rate (because people are DIYing it basically) it stands to reason you no longer have to price that in. Scaling out repair literature and part availability is cheaper than the actual service.
AngryData 7y ago
Farmers are very well aware of repair and maintenance costs, the problem is you can't tell what parts and service will cost 20 years down the line. Nor do you know what is going to break 20 years down the line because none of a new model tractor or equipment is that old yet. The only people who would know would be the manufacturer who did the original stress testing on the design and cut it down to whatever price point/reliability level they wanted to achieve, and they obviously don't want you to know and you couldn't trust them even if they did tell you without seeing the testing data.
crc32 7y ago
Great comment - the concept you speak of can be described as an "information asymmetry" or more broadly as "bounded rationality" as opposed to econ 101 theories which often assume "perfect information" or perfect rationality. https://en.wikipedia.org/wiki/Information_asymmetry https://en.wikipedia.org/wiki/Information_asymmetry https://en.wikipedia.org/wiki/Bounded_rationality https://en.wikipedia.org/wiki/Bounded_rationality I think really only a rabid free-marketer (as opposed to all economists as you imply in the first sentence) would expect the market to self correct on something like this.
- Balanceinfinity 7y ago
  Thanks, I think the best way to think of this is that with better competition in the primary market, we can expect more information about secondary costs to be available at the time of purchase (and the hope is that the competitors will compete most of these away at the time of sale). I don't pretend this will likely happen at 100%, but there should be some of this in most functioning markets without huge information lacunas (such as healthcare).

bduerst 7y ago

When buying, if there are contractual strings attached to the use of the asset then it's more of a lease purchase than actual asset purchase. As it is now, farmers that are purchasing the asset are saying they want to use the asset as they deem fit, including repairs.

Balanceinfinity 7y ago
agreed. But when they purchased the machines, they should have looked at the services terms and taken that into account when making their purchases. If there's competition in the market (no idea) then presumably someone would try to beat its competitors by offering a better service option (such as unlocked diagnostics). This issue went to the supreme court on the question of whether a manufacturer could "monopolize" its aftermarket. https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Technical_Services,_Inc https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Tec....
- ShroudedNight 7y ago
  Link is missing the trailing period: https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Technical_Services,_Inc. https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Tec.... FWIW, I had to add an extra period at the end to get the original one to get included as part of the link.
  - detaro 7y ago
    another possible trick is urlencoding the dot as %2E: https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Technical_Services,_Inc%2E https://en.wikipedia.org/wiki/Eastman_Kodak_Co._v._Image_Tec...
  - Balanceinfinity 7y ago
    Thanks
aeternum 7y ago
The problem is that almost every new device now includes these hidden contractual strings. Your phone will only run software signed by the developer, same with your smart tv, chromebook, your car, many new refrigerators, etc. As a consumer, it is very hard to determine the restrictions that this imposes on ability to fix as it varies widely between devices. I haven't seen any manufacturer label these items as a lease nor be upfront with the support lifetime.

Crashbat 7y ago

I'm pretty sure the farmers know very well the lifecycle costs of their heavy machinery, the problem isn't ill-informed consumers. The problem is the time as well as expense of repairs is controlled by the manufacturers. The razor example isn't analogous here, you can pretty much plan for when you need new blades. A farmer can't predict when the equipment will break down.

Balanceinfinity 7y ago
Lifecycle costs of machinery are pretty standard (especially after whatever warranty expires). And, of course, the farmer can avoid the risks of these costs by simply extending the warranty - then all the risk is on the warranty provider. But the homework the farmer (or any purchaser - this same issue arises for medical imaging equipment, cars, busses, etc) should do is what will the service market looklike for his or her equipment after warranty. It's not easy to do this research - but the flip side is this: if the manufacturers have to sell unlocked service, they will charge more for the original sale. Economically speaking that may be better because the costs will be clearer.
- larkost 7y ago
  My understanding is that it is not only cost that is problematic, but rather time. If you need to harvest, then you need to harvest now, not in 2 weeks. Whereas the dealer repair shops are not always available in those time frames. Especially not if you are in the field and have to unclog something, and then need a dealer-only code to re-enable the in-failure-mode part.
  - spamizbad 7y ago
    Your understanding is correct. It doesn't matter if the equipment is free: if it breaks down during a planting window or harvest season you stand to lose significant amounts of money. Dealers may not have the parts, may not be able to provide the repair without calling in a technician, or may be located far away. People are talking about R2R making things more expensive but the opposite can be true: service centers can often be lossy operations, so if you have to service machines at a lower rate (because people are DIYing it basically) it stands to reason you no longer have to price that in. Scaling out repair literature and part availability is cheaper than the actual service.

AngryData 7y ago

Farmers are very well aware of repair and maintenance costs, the problem is you can't tell what parts and service will cost 20 years down the line. Nor do you know what is going to break 20 years down the line because none of a new model tractor or equipment is that old yet. The only people who would know would be the manufacturer who did the original stress testing on the design and cut it down to whatever price point/reliability level they wanted to achieve, and they obviously don't want you to know and you couldn't trust them even if they did tell you without seeing the testing data.

crc32 7y ago

Great comment - the concept you speak of can be described as an "information asymmetry" or more broadly as "bounded rationality" as opposed to econ 101 theories which often assume "perfect information" or perfect rationality. https://en.wikipedia.org/wiki/Information_asymmetry https://en.wikipedia.org/wiki/Information_asymmetry https://en.wikipedia.org/wiki/Bounded_rationality https://en.wikipedia.org/wiki/Bounded_rationality I think really only a rabid free-marketer (as opposed to all economists as you imply in the first sentence) would expect the market to self correct on something like this.

Balanceinfinity 7y ago
Thanks, I think the best way to think of this is that with better competition in the primary market, we can expect more information about secondary costs to be available at the time of purchase (and the hope is that the competitors will compete most of these away at the time of sale). I don't pretend this will likely happen at 100%, but there should be some of this in most functioning markets without huge information lacunas (such as healthcare).