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You can view this issue from another standpoint. Imagine some market where 10 companies sell bread and it costs $5. And lets assume that the costs are $4 and $

You can view this issue from another standpoint. Imagine some market where 10 companies sell bread and it costs $5. And lets assume that the costs are $4 and $1 is profit. Then comes a company that makes its money on selling water and it is doing very well. It comes to a bread market and starts selling bread for $3. The competition is quickly destroyed and the bread prices rise. Edit: as a sibling comment mentioned: https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing

whatshisface 6y ago
Google buys labor using the proceeds from the stuff they assign the labor to do. Their money does not come from a second market unrelated to programmers. Even if you flipped buyers and sellers your analogy would be inapplicable.
- a1369209993 6y ago
  > Their money does not come from a second market unrelated to [those] programmers. Yes it does: Google makes money from advertising, not from self-driving cars.
pepemon 6y ago
Are you sure that there's the direct analogy between pricing and salary models like that?
shard 6y ago
I believe a better analogy would be that the 11th company comes and is willing to pay higher costs while still selling at the same price. That company gets the best ingredients at that cost, the suppliers prefer to sell to that company, and denies it to the first 10 companies. The 11th company might even raise prices since their product is better. I don't think predatory pricing would apply in this situation.
biztos 6y ago
Sorry, but that's not what's being described here. If you want it to be about your bread market, then the water guy is hiring your best baker because bread is worth $10 when combined with water, but only if it's particularly good bread. Maybe 50 of the other 99 bakers at the 10 bread-selling companies are also capable of making good bread and will feel bad, maybe the company that lost the baker will feel bad, maybe that company will even fail because it turns out that really was their best baker... but in that case, it just proves that the water company was paying the market price for that baker. Which they were. Spending more on talent is not predatory pricing.

whatshisface 6y ago

Google buys labor using the proceeds from the stuff they assign the labor to do. Their money does not come from a second market unrelated to programmers. Even if you flipped buyers and sellers your analogy would be inapplicable.

a1369209993 6y ago
> Their money does not come from a second market unrelated to [those] programmers. Yes it does: Google makes money from advertising, not from self-driving cars.

pepemon 6y ago

Are you sure that there's the direct analogy between pricing and salary models like that?

shard 6y ago

I believe a better analogy would be that the 11th company comes and is willing to pay higher costs while still selling at the same price. That company gets the best ingredients at that cost, the suppliers prefer to sell to that company, and denies it to the first 10 companies. The 11th company might even raise prices since their product is better. I don't think predatory pricing would apply in this situation.

biztos 6y ago

Sorry, but that's not what's being described here. If you want it to be about your bread market, then the water guy is hiring your best baker because bread is worth $10 when combined with water, but only if it's particularly good bread. Maybe 50 of the other 99 bakers at the 10 bread-selling companies are also capable of making good bread and will feel bad, maybe the company that lost the baker will feel bad, maybe that company will even fail because it turns out that really was their best baker... but in that case, it just proves that the water company was paying the market price for that baker. Which they were. Spending more on talent is not predatory pricing.