7 ms·

>But it's classic economic theory: if Intel can charge some people more for ecc, and charge other people less who don't want it, that is an optimal pricing stra

>But it's classic economic theory: if Intel can charge some people more for ecc, and charge other people less who don't want it, that is an optimal pricing strategy. I did not learn enough economy in school, so is there no limit for this? Example, I invent a medicine for a rare illness that kills 1000 people/year. It costs me 1$ for treatment but when I want to sell this the money dudes make this calculations: 1 if we sell it with 1$ we earn 1000$/year and we have 0 deaths because all 1000 people afford it 2 if we sell it with 10$ , only 900 people aford it and we earn 9000$ and we kill 100 people with our greed 3 if we sell it with 100$ then only 100 people afford it but we earn 10000$ then the guys make a plot and find that we make more profit when we let most of our possible customer to die , but since we have shareholders and everyone wants money we doom 900 people to death so we can earn 10x more money. There should be some limits/incentives where such immoral shit won't happen, but so far the only thing I noticed was when asshole was shamed on Twitter for some medicine price increases (I forgot the name). This idea of a price to be the maximum number that maximizes our profit and not consider any morality is IMO evil. It also has the side effect where you get giants like Google,Facebook,MS, Apple that have too much profit that they use to do evil things, things that free market people consider wrong.

southerntofu 5y ago
> This idea of a price to be the maximum number that maximizes our profit and not consider any morality is IMO evil. Yes, it's called capitalism and private property, the two most insane human inventions across history.
- adwn 5y ago
  > Yes, it's called capitalism and private property, the two most insane human inventions across history. That's also the system that has produced more wealth and prosperity than any other system in human history. Yes, unchecked capitalism leads to great problems, but there's no such thing as unchecked capitalism anywhere in the Western world today, not even in the US.
wongarsu 5y ago
The medical company would say they aren't killing people, they just choose not to save them. Whether that's a difference depends on your ethical framework. But of course most Western countries resolve this kind of conundrum in healthcare with collective bargaining, whether that's at the government level or at the insurance level (which only really works if you ensure absolutely everyone has insurance). If the offer is "we will buy 1000 doses/year for no more than $15 each" the dynamic changes a lot.
- simion314 5y ago
  Sure, in western countries we have some health care systems, but let's say what will happen in a pure capitalistic system - I wish there would be a game engine or program where we can input an economic/political system and see what happens. Can we observe this anomalies(giants, monopolies,duopolies, cartels , ) appearing then try different strategies to prevent that to happen? Would be cool to maybe do a search algorithm to find the best strategy to distribute money, healthcare, education to as many people as possible and could be also cool to test your own ideas, like maybe I am thinking that a tax/regulation for X would have some good effect, I could put it in the simulation and maybe discover something I did not anticipated.
  - wongarsu 5y ago
    Simulating (or predicting/describing) economic situations is exactly what game theory is about. It allows you to basically set up a set of rules, and under some assumptions (everyone knows the rules, everyone behaves rationally, etc) calculate what will happen. In that context it's important to note that collective bargaining is very much a feature of a pure capitalistic system. Just as the supply side seeks advantages by forming monopolies or cartels, the demand side seeks advantages by forming unions or purchasing pools. Both sides face similar challenges with this, like holding the group together and prevent betrayal (so you have to set up a Nash equilibrium where any one party leaving loses from doing so). You can certainly end up with universal healthcare in a pure capitalistic system because for the buyer side it decreases risk (because of the insurance characteristics) and lowers costs (due to the collective bargaining).
- 5y ago
sokoloff 5y ago
What you’re likely to find (and what Intel and others are doing) is they’ll (try to) find a way to sell 100 doses at $100, 100 at $75, 500 at $20, and have some other hardship programs to sell doses at $10 or $0. That way, they make even more money, which in the scope of saving 1000 lives per year, I’m totally cool with as it tends to support those drugs getting developed and produced.
- qeternity 5y ago
  Which is exactly what happens in the real world. Developing nations do not pay the same prices for medicine that developed nations do. Wealthy nations end up subsidizing the cost for poorer nations.
  - simion314 5y ago
    >Wealthy nations end up subsidizing the cost for poorer nations. Or "subsidizing" the new yachts for the big bosses. Also many things were created by scientist from non-western countries, so we poor countries also contributed to those yachts with out taxes to pay the education of our people. Do you think that without the big dirty profits that are split between billionaires the people that work on science would work on something else, like cooking? I mean why would they care that their boss will have a smaller yacht? I am also assuming that not all people that start a business are doing it for a giant dirty pile of money, most will do it for enough money for a decent life, some are doing it because they want to do something positive, and only the evil bastards will do it to make tons of money by exploiting others.
SomeHacker44 5y ago
Since you mention you did not study economics, I will make a small note on terminology. "Earn" in economics means profit. What you mean, the way it might be said by economists, is you receive $1000 in revenue. That is, funds you get from customers paying for your product. To go a bit further, you would "earn" that amount less the costs of providing the product, including amortized costs for its development.
- nandhinianand 5y ago
  Uhh.. this is true.. but it feels like nitpicking.. The OP clearly said the source cost is $1 per treatment.. so it shouldn't make a difference.
adwn 5y ago
It's a bit disingenuous to suggest that Intel's price segmentation is on par with intentionally letting people die. Look at it from another perspective: Say there's a company making gummy bears, and they sell the red gummy bears for 2x the price of the green gummy bears, although they cost the same in production. Would you claim that this company is acting immorally?
- LocalH 5y ago
  If they ship some red ones mixed in with the rest in the normal bags, and then go around suing people who say "hey you can get some red ones by just buying regular bags" then they would be ridiculed.
gruez 5y ago
>Example, I invent a medicine for a rare illness that kills 1000 people/year. It costs me 1$ for treatment but when I want to sell this the money dudes make this calculations: This analysis has a fundamental flaw because medical inventions aren't a one time thing, it's a iterated over multiple times. I'm sure the government expropriating the drug and selling it for $1 would produce the best outcomes for this iteration, but what about future iterations? In other words, what about all the drugs that won't be discovered in the future because there's no expectation of returns?
- simion314 5y ago
  My scenario includes profits in all possible choices, the issue is that some choices have less obscene profits. What would happen is maybe some immoral people would change jobs to the ones that maximizes profit/work done. I understand that say a business man that is not a researcher will want to put his money into researching the thing that gives him the most amount of money back so there is a risk that all billionaires will leave the big pharma and invest into homeopathic products but maybe we could find a solution, date I say, tax the obscene profits and use the money into research of important stuff?
  - gruez 5y ago
    >My scenario includes profits in all possible choices, the issue is that some choices have less obscene profits. What counts as "obscene profits"? Purely from a % point of view? What if the drug has high R&D costs? What if they drug have a small patient base to amortize fixed costs over? What if the drug was a moonshot project with little chance of succeeding? >What would happen is maybe some immoral people would change jobs to the ones that maximizes profit/work done. But don't we want that? If we want rare diseases cured, we shouldn't depend on the efforts of altruistic researchers alone. Promise of high drug prices allows companies to attract more researchers, both altruistic and immoral/indifferent ones. >tax the obscene profits and use the money into research of important stuff? I don't get it. So you're okay with obscene profits, as long as they're taxed appropriately?
    - 5y ago
joeyrideout 5y ago
In scenario #1, there is no financial incentive (read: livable wages for researchers, manufacturers, etc.) to create medicine because your profit is $0, and we have 1000 deaths because nobody makes the medicine. In theory if the amortized cost of a dose (including R&D salaries, equipment, drug trials, and manufacturing) is truly $1 per dose for such a tiny addressable market, competitors will pop up all over the place and undercut you on price. From a game theory perspective, a firm choosing option #3 would lose ALL of their market share to another firm choosing option #2, and would have profit of -$1000 because they are unable to sell any of their doses.
- simion314 5y ago
  >In scenario #1, there is no financial incentive... FALSE, In scenario 1 there would be a profit but not the maximum possible profit. This means some dudes will have to use fancy cars and not giant yachts. >In theory if the amortized cost of a dose (including R&D salaries, equipment, drug trials, and manufacturing) is truly $1 per dose for such a tiny addressable market, competitors will pop up all over the place and undercut you on price. FALSE, competitors will not be allowed to make this for 10 or 20 years. >From a game theory perspective, a firm choosing option #3 would lose ALL of their market share to another firm choosing option #2, and would have profit of -$1000 because they are unable to sell any of their doses. FALSE, if there are 2 companies that sell same products there is an equilibrium where you split the market in half and have both more profits then one dominating the market but with small prices. This is the prisoner dilemma, if you cooperate you get better results for both.
  - joeyrideout 5y ago
    > I invent a medicine [...] It costs me 1$ > we sell it with 1$ [sic] Your profit here is zero, in your own hypothetical scenario. Help me understand why the Math is different. > competitors will not be allowed to make this for 10 or 20 years You didn't mention your stance on patents and/or intellectual property. If a medicine is patented, would you be in favor of stealing the patented ideas from the inventor in order to lower costs for life-saving medicines through increased competition? This sounds nice, akin to stealing a loaf of bread when you are hungry, but I can't help but think a society that condones stealing inventions from inventors would breed many inventors. Then we are left with the "nobody made the medicine" problem. EDIT: And by "inventors", realistically I mean "firms willing to sink hundreds of millions of dollars into R&D".

southerntofu 5y ago

> This idea of a price to be the maximum number that maximizes our profit and not consider any morality is IMO evil. Yes, it's called capitalism and private property, the two most insane human inventions across history.

adwn 5y ago
> Yes, it's called capitalism and private property, the two most insane human inventions across history. That's also the system that has produced more wealth and prosperity than any other system in human history. Yes, unchecked capitalism leads to great problems, but there's no such thing as unchecked capitalism anywhere in the Western world today, not even in the US.

wongarsu 5y ago

The medical company would say they aren't killing people, they just choose not to save them. Whether that's a difference depends on your ethical framework. But of course most Western countries resolve this kind of conundrum in healthcare with collective bargaining, whether that's at the government level or at the insurance level (which only really works if you ensure absolutely everyone has insurance). If the offer is "we will buy 1000 doses/year for no more than $15 each" the dynamic changes a lot.

simion314 5y ago
Sure, in western countries we have some health care systems, but let's say what will happen in a pure capitalistic system - I wish there would be a game engine or program where we can input an economic/political system and see what happens. Can we observe this anomalies(giants, monopolies,duopolies, cartels , ) appearing then try different strategies to prevent that to happen? Would be cool to maybe do a search algorithm to find the best strategy to distribute money, healthcare, education to as many people as possible and could be also cool to test your own ideas, like maybe I am thinking that a tax/regulation for X would have some good effect, I could put it in the simulation and maybe discover something I did not anticipated.
- wongarsu 5y ago
  Simulating (or predicting/describing) economic situations is exactly what game theory is about. It allows you to basically set up a set of rules, and under some assumptions (everyone knows the rules, everyone behaves rationally, etc) calculate what will happen. In that context it's important to note that collective bargaining is very much a feature of a pure capitalistic system. Just as the supply side seeks advantages by forming monopolies or cartels, the demand side seeks advantages by forming unions or purchasing pools. Both sides face similar challenges with this, like holding the group together and prevent betrayal (so you have to set up a Nash equilibrium where any one party leaving loses from doing so). You can certainly end up with universal healthcare in a pure capitalistic system because for the buyer side it decreases risk (because of the insurance characteristics) and lowers costs (due to the collective bargaining).
5y ago

sokoloff 5y ago

What you’re likely to find (and what Intel and others are doing) is they’ll (try to) find a way to sell 100 doses at $100, 100 at $75, 500 at $20, and have some other hardship programs to sell doses at $10 or $0. That way, they make even more money, which in the scope of saving 1000 lives per year, I’m totally cool with as it tends to support those drugs getting developed and produced.

qeternity 5y ago
Which is exactly what happens in the real world. Developing nations do not pay the same prices for medicine that developed nations do. Wealthy nations end up subsidizing the cost for poorer nations.
- simion314 5y ago
  >Wealthy nations end up subsidizing the cost for poorer nations. Or "subsidizing" the new yachts for the big bosses. Also many things were created by scientist from non-western countries, so we poor countries also contributed to those yachts with out taxes to pay the education of our people. Do you think that without the big dirty profits that are split between billionaires the people that work on science would work on something else, like cooking? I mean why would they care that their boss will have a smaller yacht? I am also assuming that not all people that start a business are doing it for a giant dirty pile of money, most will do it for enough money for a decent life, some are doing it because they want to do something positive, and only the evil bastards will do it to make tons of money by exploiting others.

SomeHacker44 5y ago

Since you mention you did not study economics, I will make a small note on terminology. "Earn" in economics means profit. What you mean, the way it might be said by economists, is you receive $1000 in revenue. That is, funds you get from customers paying for your product. To go a bit further, you would "earn" that amount less the costs of providing the product, including amortized costs for its development.

nandhinianand 5y ago
Uhh.. this is true.. but it feels like nitpicking.. The OP clearly said the source cost is $1 per treatment.. so it shouldn't make a difference.

adwn 5y ago

It's a bit disingenuous to suggest that Intel's price segmentation is on par with intentionally letting people die. Look at it from another perspective: Say there's a company making gummy bears, and they sell the red gummy bears for 2x the price of the green gummy bears, although they cost the same in production. Would you claim that this company is acting immorally?

LocalH 5y ago
If they ship some red ones mixed in with the rest in the normal bags, and then go around suing people who say "hey you can get some red ones by just buying regular bags" then they would be ridiculed.

gruez 5y ago

>Example, I invent a medicine for a rare illness that kills 1000 people/year. It costs me 1$ for treatment but when I want to sell this the money dudes make this calculations: This analysis has a fundamental flaw because medical inventions aren't a one time thing, it's a iterated over multiple times. I'm sure the government expropriating the drug and selling it for $1 would produce the best outcomes for this iteration, but what about future iterations? In other words, what about all the drugs that won't be discovered in the future because there's no expectation of returns?

simion314 5y ago
My scenario includes profits in all possible choices, the issue is that some choices have less obscene profits. What would happen is maybe some immoral people would change jobs to the ones that maximizes profit/work done. I understand that say a business man that is not a researcher will want to put his money into researching the thing that gives him the most amount of money back so there is a risk that all billionaires will leave the big pharma and invest into homeopathic products but maybe we could find a solution, date I say, tax the obscene profits and use the money into research of important stuff?
- gruez 5y ago
  >My scenario includes profits in all possible choices, the issue is that some choices have less obscene profits. What counts as "obscene profits"? Purely from a % point of view? What if the drug has high R&D costs? What if they drug have a small patient base to amortize fixed costs over? What if the drug was a moonshot project with little chance of succeeding? >What would happen is maybe some immoral people would change jobs to the ones that maximizes profit/work done. But don't we want that? If we want rare diseases cured, we shouldn't depend on the efforts of altruistic researchers alone. Promise of high drug prices allows companies to attract more researchers, both altruistic and immoral/indifferent ones. >tax the obscene profits and use the money into research of important stuff? I don't get it. So you're okay with obscene profits, as long as they're taxed appropriately?
  - 5y ago

joeyrideout 5y ago

In scenario #1, there is no financial incentive (read: livable wages for researchers, manufacturers, etc.) to create medicine because your profit is $0, and we have 1000 deaths because nobody makes the medicine. In theory if the amortized cost of a dose (including R&D salaries, equipment, drug trials, and manufacturing) is truly $1 per dose for such a tiny addressable market, competitors will pop up all over the place and undercut you on price. From a game theory perspective, a firm choosing option #3 would lose ALL of their market share to another firm choosing option #2, and would have profit of -$1000 because they are unable to sell any of their doses.

simion314 5y ago
>In scenario #1, there is no financial incentive... FALSE, In scenario 1 there would be a profit but not the maximum possible profit. This means some dudes will have to use fancy cars and not giant yachts. >In theory if the amortized cost of a dose (including R&D salaries, equipment, drug trials, and manufacturing) is truly $1 per dose for such a tiny addressable market, competitors will pop up all over the place and undercut you on price. FALSE, competitors will not be allowed to make this for 10 or 20 years. >From a game theory perspective, a firm choosing option #3 would lose ALL of their market share to another firm choosing option #2, and would have profit of -$1000 because they are unable to sell any of their doses. FALSE, if there are 2 companies that sell same products there is an equilibrium where you split the market in half and have both more profits then one dominating the market but with small prices. This is the prisoner dilemma, if you cooperate you get better results for both.
- joeyrideout 5y ago
  > I invent a medicine [...] It costs me 1$ > we sell it with 1$ [sic] Your profit here is zero, in your own hypothetical scenario. Help me understand why the Math is different. > competitors will not be allowed to make this for 10 or 20 years You didn't mention your stance on patents and/or intellectual property. If a medicine is patented, would you be in favor of stealing the patented ideas from the inventor in order to lower costs for life-saving medicines through increased competition? This sounds nice, akin to stealing a loaf of bread when you are hungry, but I can't help but think a society that condones stealing inventions from inventors would breed many inventors. Then we are left with the "nobody made the medicine" problem. EDIT: And by "inventors", realistically I mean "firms willing to sink hundreds of millions of dollars into R&D".