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If everyone had to disclose their margins and we removed this information asymmetry, it could be a great thing for consumers, and a great thing for efficient ma
by dannyw 7y ago
If everyone had to disclose their margins and we removed this information asymmetry, it could be a great thing for consumers, and a great thing for efficient markets.
There are a lot of grandmas and tech illiterate people buying laptops for incredibly inflated prices, from often smaller and more questionable computer shops. We're talking about 5 year old CPUs, 4GB of RAM, sometimes even a hard drive and no solid state drive.
If they had to disclose that the $999 laptop they're selling only costs $400 and they make a margin of $600 on it, and the consumer takes their money elsewhere and buys a genuinely reasonable laptop, I think that's a fantastic outcome.
- kube-system 7y agoIt would also likely disproportionately harm small business and businesses that rely on value-add services.
- jee1shi 7y agoIt's not really a value-add service if the customer isn't willing to pay $x for it.
- mc32 7y agoSay you’re a country store in Alaska 300 miles from the nearest town with active business. You have a plane. You bring in goods once in a while. You add what seems a hefty margin. In those situations I don’t see it as excessive—of course it would be contextual. And some of this is case-by-case.
- kube-system 7y agoThe customer can make that decision without seeing margins. While I generally argue in favor of transparency, I think this would end up incentivizing the wrong things. There's a lot of examples of industries where the price of the actual materials used is not as important as the expertise/training/tools of the person who assembles/installs/prepares/etc it. A policy encouraging consumers to make decisions on margin would would favor companies that skimp on their employees and punish those who are smart about their materials costs. Ultimately, it could end up encouraging wastefulness and inefficiency.
- malandrew 7y agoIt would just cause deflation. Everyone who now has their margins eroded now has less money to spend on things. Apply this to everyone and whatever good/service they provide and you end up with everyone having less to spend on goods and services that cost less. The only people that win are those that aren't subject to price transparency and compressed margins, which would likely end up being just those that work for the government, because that's a cost-plus activity.