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> Prices are not set based on costs. In a competitive market, prices follow costs. Businesses that raise price above cost lose business to businesses that do n

by rlpb 5y ago

> Prices are not set based on costs. In a competitive market, prices follow costs. Businesses that raise price above cost lose business to businesses that do not. And obviously businesses that price below cost fail. Margins might vary per-item because of market dynamics. But ultimately this is what is going on. This is Economics 101. If you want to claim otherwise, I think you need some extraordinary evidence here. Whether you want to say that means prices are "set" on costs or not is semantics. > There is no voting against what doesn't exist. In a competitive market, what doesn't exist doesn't exist because it's not economically viable. It's not economically viable because the market doesn't want it. If you think otherwise, then maybe you should start up a business that does this - since according to you, you'll make a killing.

perl4ever 5y ago
>In a competitive market, prices follow costs. So, you think the gas stations are charging you the cost of gas? Fast food joints charge you according to the cost of a hamburger or a soda? >In a competitive market, what doesn't exist doesn't exist because it's not economically viable. It's not economically viable because the market doesn't want it. If you think otherwise, then maybe you should start up a business that does this - since according to you, you'll make a killing. This is sophistry. "The market" isn't one particular thing that exists or can exist without constraints. I suggested one more, different, better, out of thousands. That could change what is economically viable. That's the point. Nothing is privileged about the exact situation that exists today, that will change tomorrow anyway. Except if you insist on an absurd Panglossianism.
- rlpb 5y ago
  > So, you think the gas stations are charging you the cost of gas? Fast food joints charge you according to the cost of a hamburger or a soda? It costs more than the cost of the goods to run a business. There's also the cost of payroll (if you remember, that's the cost I said would go up leading to higher prices). And rent, or the capex for the land and building. Maintenance. Utility bills. Taxes. Regulatory compliance. The list goes on. There's also the cost of risk, such as staff illness and any adverse business conditions (a temporary downturn caused by a pandemic included, but also seasonal variations, changes in fashion, and so on). All of that gets factored into "costs". Once it's all factored in, then yes - if the gas station is in a competitive market, then it's pricing will be approximately the same as its costs. Again, this is Economics 101. If you really thought that these weren't included in "cost", then perhaps you need to study the subject before making absurd claims.

by rlpb 5y ago

perl4ever 5y ago

>In a competitive market, prices follow costs. So, you think the gas stations are charging you the cost of gas? Fast food joints charge you according to the cost of a hamburger or a soda? >In a competitive market, what doesn't exist doesn't exist because it's not economically viable. It's not economically viable because the market doesn't want it. If you think otherwise, then maybe you should start up a business that does this - since according to you, you'll make a killing. This is sophistry. "The market" isn't one particular thing that exists or can exist without constraints. I suggested one more, different, better, out of thousands. That could change what is economically viable. That's the point. Nothing is privileged about the exact situation that exists today, that will change tomorrow anyway. Except if you insist on an absurd Panglossianism.

rlpb 5y ago
> So, you think the gas stations are charging you the cost of gas? Fast food joints charge you according to the cost of a hamburger or a soda? It costs more than the cost of the goods to run a business. There's also the cost of payroll (if you remember, that's the cost I said would go up leading to higher prices). And rent, or the capex for the land and building. Maintenance. Utility bills. Taxes. Regulatory compliance. The list goes on. There's also the cost of risk, such as staff illness and any adverse business conditions (a temporary downturn caused by a pandemic included, but also seasonal variations, changes in fashion, and so on). All of that gets factored into "costs". Once it's all factored in, then yes - if the gas station is in a competitive market, then it's pricing will be approximately the same as its costs. Again, this is Economics 101. If you really thought that these weren't included in "cost", then perhaps you need to study the subject before making absurd claims.