4 ms·

But surely the concept of loss leaders can't be problematic in itself? I have no problem with a supermarket subsidising the price of one product to get me in th

by camjw 4y ago

But surely the concept of loss leaders can't be problematic in itself? I have no problem with a supermarket subsidising the price of one product to get me in the door, for example.

hugh-avherald 4y ago
Loss leaders are fine, but it should be illegal to run at a loss in order to drive out competition. (And, I believe, it already is.)
- hhmc 4y ago
  Presumably determining if a loss leader exists to destroy competitors is tricky though? Like, MS aren’t going to come out and say “we want to bury gitlab”, even if that was the intended goal. there’s always going to be some vague brand building excuse to hide behind. (I don’t think this is the case for GitHub, but to illustrate the point)
  - PeterisP 4y ago
    It is somewhat tricky, but sometimes it can be (and has been) proven; people do say all kinds of things while doing illegal stuff, and sometimes even write it down or send it as an email.
    - hhmc 4y ago
      This is a good point — the LIBOR scandal springs to mind when thinking of the inexplicably brazen things written down whilst committing white collar crime!
kibwen 4y ago
The argument is that you should be. There's no free lunch; somebody is paying for it, and for every time that you notice that you're getting a deal there will be another time where you're getting screwed, whether or not you happen to realize it. And in the meantime, allowing large companies to throw their weight around like this reduces competition, which harms consumers in the long run even if you benefit in the short term.
- cruano 4y ago
  Not saying I disagree but in my country, the minute Uber Eats started charging for delivery and stopped giving out subsidized free food was the minute a bunch of competitors popped up So yeah, for a while it was only uber eats but they didn't maintain that lead without those subsidies that were (apparently) a net positive for consumers
- stale2002 4y ago
  > somebody is paying for it Ok, and what if it was the investors who were paying for it? VC funded startups have been a very successful method of transferring wealth from rich investors to consumers.
treis 4y ago
Different products. GitHub, more or less, has zero marginal cost for an additional customer. So they can afford to give away their product solely to starve the market for competitors. Supermarkets can't do that because they have a significant marginal cost for each good sold/given away. They can't afford to give away milk to 10 million people to get 500k of them to pay for something else. So the market distortion effects are much more limited in the case of physical goods.

by camjw 4y ago

But surely the concept of loss leaders can't be problematic in itself? I have no problem with a supermarket subsidising the price of one product to get me in the door, for example.

hugh-avherald 4y ago

Loss leaders are fine, but it should be illegal to run at a loss in order to drive out competition. (And, I believe, it already is.)

hhmc 4y ago
Presumably determining if a loss leader exists to destroy competitors is tricky though? Like, MS aren’t going to come out and say “we want to bury gitlab”, even if that was the intended goal. there’s always going to be some vague brand building excuse to hide behind. (I don’t think this is the case for GitHub, but to illustrate the point)
- PeterisP 4y ago
  It is somewhat tricky, but sometimes it can be (and has been) proven; people do say all kinds of things while doing illegal stuff, and sometimes even write it down or send it as an email.
  - hhmc 4y ago
    This is a good point — the LIBOR scandal springs to mind when thinking of the inexplicably brazen things written down whilst committing white collar crime!

kibwen 4y ago

The argument is that you should be. There's no free lunch; somebody is paying for it, and for every time that you notice that you're getting a deal there will be another time where you're getting screwed, whether or not you happen to realize it. And in the meantime, allowing large companies to throw their weight around like this reduces competition, which harms consumers in the long run even if you benefit in the short term.

cruano 4y ago
Not saying I disagree but in my country, the minute Uber Eats started charging for delivery and stopped giving out subsidized free food was the minute a bunch of competitors popped up So yeah, for a while it was only uber eats but they didn't maintain that lead without those subsidies that were (apparently) a net positive for consumers
stale2002 4y ago
> somebody is paying for it Ok, and what if it was the investors who were paying for it? VC funded startups have been a very successful method of transferring wealth from rich investors to consumers.

treis 4y ago

Different products. GitHub, more or less, has zero marginal cost for an additional customer. So they can afford to give away their product solely to starve the market for competitors. Supermarkets can't do that because they have a significant marginal cost for each good sold/given away. They can't afford to give away milk to 10 million people to get 500k of them to pay for something else. So the market distortion effects are much more limited in the case of physical goods.