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The correlary is that McDonalds could offer free burgers for a year, they have enough money to handle the cost. They could do it just so that other business can

The correlary is that McDonalds could offer free burgers for a year, they have enough money to handle the cost. They could do it just so that other business cant stay affloat. This doesn't mean that the market price of a McDonalds burger is $0

ISL 6y ago
It does if McDonalds decides that it wishes to dump burgers. The ask price would fall to $0. The market will correct very quickly, as competitors will immediately head over to McDonalds to purchase $\infty$ burgers at $0, killing MCD dead in seconds. The moment McDonalds applies a purchase limit (Free burgers! Limit 5 per customer), the burgers have non-zero cost, as they require a person's time in order to purchase. If McDonalds does have enough capital to buy long-term customers and kill off competition with free burgers, perhaps they should consider it. I assume that they've considered such a strategy on occasion and concluded that it isn't worth it. Burgers are probably worth more than $0 to McDonalds, too.
- jefftk 6y ago
  > If McDonalds does have enough capital to buy long-term customers and kill off competition with free burgers, perhaps they should consider it. I'm pretty sure they should not consider it, because it is generally illegal. https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing
  - stale2002 6y ago
    > I'm pretty sure they should not consider it, because it is generally illegal. It is really not. At least in America. In America, where laws are based on consumer benefit, it is extremely difficult to prosecute companies for having too awesome of a service, that they give away for too good of a price, in a way that helps consumers too much. It really just isn't something that gets prosecuted, except in absolutely exceptional circumstances.
    - ghaff 6y ago
      Leaving aside any skirting of regulations also involved, is the government going to prosecute Uber or Lyft because they're losing boatloads of money and therefore obviously priced too low?
      - stale2002 6y ago
        This is a great example, actually. Because Uber is no stranger to being prosecuted by the government. That happened a bunch of times, when they were operating as a taxi company, without following taxi laws (before they got those laws changed, of course, lol). But of all the things that Uber has gotten in trouble with, do you know what they have not been prosecuted for? They have not been prosecuted for selling taxi services for too low of a price to consumers. Breaking taxi laws = yep prosecuted But price dumping = nope, not in trouble for that.
  - snowwrestler 6y ago
    Keeping in mind where this thread started... I'm not aware of a similar law that prohibits employers from overpaying their employees, though.
- ghaff 6y ago
  McDonald's (among many other places--especially those with many lower income customers) certainly do have loss leaders. I don't eat at McDonald's but I assume something like the $1 $2 $3 menu functions as something to get people in the door after which they or their friends may buy high-priced/margin items as well.
- deleted 6y ago
  [deleted]
metric10 6y ago
I don't think Google is operating at a total loss when they pay a developers these salaries? Software is making Google (and many other tech companies) hundreds of billions per year in profit and people are complaining about a 6 figure salary being too high. If all I can afford to pay a developer is minimum wage, is he or she now obligated to work for me at my "market rate?" At what point does it go from not having enough money to afford a highly qualified developer to becoming "poaching?" ed: Toned it down a little. I think tech is making an absurd amount of money and it's exasperating to see people complain about paying their workers too much.
- johncolanduoni 6y ago
  Alphabet’s revenue isn’t even multiple hundreds of billions (it was $161 billion last year). Their profit is “only” in the tens of billions range.
- Leherenn 6y ago
  I don't think people are complaining workers are paid too much, but that some markets are distorted by external forces. Let's say you're a company in a field, competing against other companies in that same field. Everyone is basing wages on how much money they expect to make and so on. Not everyone has the same estimations, but in the end they're all grounded in that market. Now comes a company with virtually limitless from some other market, who doesn't care about making money but about achieving dominance. All of the sudden, they're throwing wages around you can't compete with because they're not trying to be profitable.
  - metric10 6y ago
    Google is not operating at a loss, however. They are not paying people exorbitant salaries to keep them from working at smaller companies. They are paying them six figure salaries and making _billions_ doing it. Google seems to very much care about making money. Six figures seems small to me, if anything. Did I miss something?
shard 6y ago
There's no need to contort an analogy. It's just like as if McDonalds pays more for the best employees, such as real estate analysts, beef sourcing agents, taste scientists. Other burger joints are then denied the talent. Nobody would complain that McDonalds are poaching real estate analysts from Burger King.

ISL 6y ago

It does if McDonalds decides that it wishes to dump burgers. The ask price would fall to $0. The market will correct very quickly, as competitors will immediately head over to McDonalds to purchase $\infty$ burgers at $0, killing MCD dead in seconds. The moment McDonalds applies a purchase limit (Free burgers! Limit 5 per customer), the burgers have non-zero cost, as they require a person's time in order to purchase. If McDonalds does have enough capital to buy long-term customers and kill off competition with free burgers, perhaps they should consider it. I assume that they've considered such a strategy on occasion and concluded that it isn't worth it. Burgers are probably worth more than $0 to McDonalds, too.

jefftk 6y ago
> If McDonalds does have enough capital to buy long-term customers and kill off competition with free burgers, perhaps they should consider it. I'm pretty sure they should not consider it, because it is generally illegal. https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing
- stale2002 6y ago
  > I'm pretty sure they should not consider it, because it is generally illegal. It is really not. At least in America. In America, where laws are based on consumer benefit, it is extremely difficult to prosecute companies for having too awesome of a service, that they give away for too good of a price, in a way that helps consumers too much. It really just isn't something that gets prosecuted, except in absolutely exceptional circumstances.
  - ghaff 6y ago
    Leaving aside any skirting of regulations also involved, is the government going to prosecute Uber or Lyft because they're losing boatloads of money and therefore obviously priced too low?
    - stale2002 6y ago
      This is a great example, actually. Because Uber is no stranger to being prosecuted by the government. That happened a bunch of times, when they were operating as a taxi company, without following taxi laws (before they got those laws changed, of course, lol). But of all the things that Uber has gotten in trouble with, do you know what they have not been prosecuted for? They have not been prosecuted for selling taxi services for too low of a price to consumers. Breaking taxi laws = yep prosecuted But price dumping = nope, not in trouble for that.
- snowwrestler 6y ago
  Keeping in mind where this thread started... I'm not aware of a similar law that prohibits employers from overpaying their employees, though.
ghaff 6y ago
McDonald's (among many other places--especially those with many lower income customers) certainly do have loss leaders. I don't eat at McDonald's but I assume something like the $1 $2 $3 menu functions as something to get people in the door after which they or their friends may buy high-priced/margin items as well.
deleted 6y ago
[deleted]

metric10 6y ago

I don't think Google is operating at a total loss when they pay a developers these salaries? Software is making Google (and many other tech companies) hundreds of billions per year in profit and people are complaining about a 6 figure salary being too high. If all I can afford to pay a developer is minimum wage, is he or she now obligated to work for me at my "market rate?" At what point does it go from not having enough money to afford a highly qualified developer to becoming "poaching?" ed: Toned it down a little. I think tech is making an absurd amount of money and it's exasperating to see people complain about paying their workers too much.

johncolanduoni 6y ago
Alphabet’s revenue isn’t even multiple hundreds of billions (it was $161 billion last year). Their profit is “only” in the tens of billions range.
Leherenn 6y ago
I don't think people are complaining workers are paid too much, but that some markets are distorted by external forces. Let's say you're a company in a field, competing against other companies in that same field. Everyone is basing wages on how much money they expect to make and so on. Not everyone has the same estimations, but in the end they're all grounded in that market. Now comes a company with virtually limitless from some other market, who doesn't care about making money but about achieving dominance. All of the sudden, they're throwing wages around you can't compete with because they're not trying to be profitable.
- metric10 6y ago
  Google is not operating at a loss, however. They are not paying people exorbitant salaries to keep them from working at smaller companies. They are paying them six figure salaries and making _billions_ doing it. Google seems to very much care about making money. Six figures seems small to me, if anything. Did I miss something?

shard 6y ago

There's no need to contort an analogy. It's just like as if McDonalds pays more for the best employees, such as real estate analysts, beef sourcing agents, taste scientists. Other burger joints are then denied the talent. Nobody would complain that McDonalds are poaching real estate analysts from Burger King.