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This is exactly why "fair trade" products like coffee and chocolate exist. There is an agreement to have an absolute minimum purchase price to prevent a big cor

This is exactly why "fair trade" products like coffee and chocolate exist. There is an agreement to have an absolute minimum purchase price to prevent a big corporation from clobbering the competition by taking a loss, then jacking up the price. See also: rideshare. VC pumps in billions so that Lyft & Uber can be cheaper than taxis at a HUGE loss -> taxis go out of business -> Lyft & Uber jack up their prices because they own the market.

kortilla 7y ago
That’s called a cartel. See OPEC. If that’s all “fair trade” is, that’s an impressive marketing tactic.
- Mathnerd314 7y ago
  It's also called product differentiation. Oil is a commodity, but there are grades of oil and the amount of sulfur varies, so there is "sour" oil, "light" oil, etc. similar to "fair trade" chocolate.
AnthonyMouse 7y ago
> See also: rideshare. VC pumps in billions so that Lyft & Uber can be cheaper than taxis at a HUGE loss -> taxis go out of business -> Lyft & Uber jack up their prices because they own the market. Did the rideshare companies actually jack up their prices at any point? How would they do that when they're still in competition with each other and the barrier to entry to the market remains low? Any attempt to raise prices would immediately result in more competitors. That was the whole thing with the taxi medallions. It was a cartel, because that market has very low barriers to entry and the taxi companies didn't want the competition. Uber didn't make prices artificially low, they just provided competition which stopped them from being artificially high. They're not losing money on rides, they're "losing money" on self-driving car R&D and things like that. And "fair trade" is a marketing device. People want to feel good about not exploiting people, so companies not exploiting people get to charge a premium for that. That doesn't mean companies who are paying suppliers less don't still exist or offer similar products for lower prices purchased by customers who don't care as much about that. Neither of these are examples of what you're describing.
- computerex 7y ago
  Uber rides are subsidized. Uber loses money on each ride. The self-driving R&D is what will presumably save Uber. Their biggest expense (the drivers) will go away.
  - AnthonyMouse 7y ago
    > Uber loses money on each ride. How is that even possible? They get a percentage of the fare and their unit cost is only a tiny bit of server utilization.
    - mattmanser 7y ago
      As far as I have heard, when they enter a market, they pay the driver more than they're getting from the user. Plus marketing. You think Google let Uber put an advert on every Google Maps search for free? There's actually a whole article about it on crunchbase: https://news.crunchbase.com/news/understanding-uber-loses-money/ https://news.crunchbase.com/news/understanding-uber-loses-mo...
      - AnthonyMouse 7y ago
        That's not unit cost. Companies spend money on advertising when they're new because it pays dividends for decades. It's not inherently loss-making, it's just investment that hasn't returned its full yield yet.
        viklove 7y ago
        It's an investment that the company can't afford to make at the moment. An existing, efficient, and self-sustaining player can be drowned out by a few VCs subsidizing costs and making it impossible to compete for a few years. The American VC system is disgusting. It allows a few wealthy individuals to choose winners not because they are the best solution, but just because through nefarious tactics they are the last ones standing.

kortilla 7y ago

That’s called a cartel. See OPEC. If that’s all “fair trade” is, that’s an impressive marketing tactic.

Mathnerd314 7y ago
It's also called product differentiation. Oil is a commodity, but there are grades of oil and the amount of sulfur varies, so there is "sour" oil, "light" oil, etc. similar to "fair trade" chocolate.

AnthonyMouse 7y ago

> See also: rideshare. VC pumps in billions so that Lyft & Uber can be cheaper than taxis at a HUGE loss -> taxis go out of business -> Lyft & Uber jack up their prices because they own the market. Did the rideshare companies actually jack up their prices at any point? How would they do that when they're still in competition with each other and the barrier to entry to the market remains low? Any attempt to raise prices would immediately result in more competitors. That was the whole thing with the taxi medallions. It was a cartel, because that market has very low barriers to entry and the taxi companies didn't want the competition. Uber didn't make prices artificially low, they just provided competition which stopped them from being artificially high. They're not losing money on rides, they're "losing money" on self-driving car R&D and things like that. And "fair trade" is a marketing device. People want to feel good about not exploiting people, so companies not exploiting people get to charge a premium for that. That doesn't mean companies who are paying suppliers less don't still exist or offer similar products for lower prices purchased by customers who don't care as much about that. Neither of these are examples of what you're describing.

computerex 7y ago
Uber rides are subsidized. Uber loses money on each ride. The self-driving R&D is what will presumably save Uber. Their biggest expense (the drivers) will go away.
- AnthonyMouse 7y ago
  > Uber loses money on each ride. How is that even possible? They get a percentage of the fare and their unit cost is only a tiny bit of server utilization.
  - mattmanser 7y ago
    As far as I have heard, when they enter a market, they pay the driver more than they're getting from the user. Plus marketing. You think Google let Uber put an advert on every Google Maps search for free? There's actually a whole article about it on crunchbase: https://news.crunchbase.com/news/understanding-uber-loses-money/ https://news.crunchbase.com/news/understanding-uber-loses-mo...
    - AnthonyMouse 7y ago
      That's not unit cost. Companies spend money on advertising when they're new because it pays dividends for decades. It's not inherently loss-making, it's just investment that hasn't returned its full yield yet.
      - viklove 7y ago
        It's an investment that the company can't afford to make at the moment. An existing, efficient, and self-sustaining player can be drowned out by a few VCs subsidizing costs and making it impossible to compete for a few years. The American VC system is disgusting. It allows a few wealthy individuals to choose winners not because they are the best solution, but just because through nefarious tactics they are the last ones standing.