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FWIW, I believe this has been debunked. Volume (when there is a net margin) always equates to greater profit until market saturation. Veblen goods rarely work f
by ChuckMcM 6y ago
FWIW, I believe this has been debunked. Volume (when there is a net margin) always equates to greater profit until market saturation. Veblen goods rarely work for niche markets but can work for commodity markets (see cars and watches for examples).
- weberer 6y agoThen why are there diamond cartels?
- ChuckMcM 6y agoYou aren't serious right? I mean there is a whole article on DeBeers (https://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/ https://www.theatlantic.com/magazine/archive/1982/02/have-yo...).
- lostcolony 6y agoI'm not saying it's a Veblen good. I'm saying that even though the demand drops as the price goes up, it may well not drop so far that it's a loss of net profit to sell at high margin. They do, after all, have a monopoly on the good. If you're saying that even holding a monopoly, the most profitable price point is at market saturation, I'd need to see something backing that. And also what you mean by market saturation; the cost of parts for an iPhone 11 Pro is estimated to be ~$490. The list price is, what, $1100? You're basically saying that either they've already achieved market saturation, and would gain no new customers dropping the price to $600 (parts + $100 for distribution, assembly, etc), or that they're leaving money on the table. I find both of those very hard to believe. So maybe I'm misunderstanding you?