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Please read my post again, lowering of internal costs does not lower external costs unless doing so increases profit due to volume changes. You're arguing that
by P5fRxh5kUvp2th 4y ago
Please read my post again, lowering of internal costs does not lower external costs unless doing so increases profit due to volume changes.
You're arguing that a company with competition may choose to lower its price whether or not internal costs have lowered (or not). That's a different question entirely.
- missedthecue 4y agoIf lower internal costs are achieved there is more flexibility to competitively price your product, i.e. reduce prices. The classic example is televisions. They no longer cost $3000 because of competition and internal cost reduction.
- P5fRxh5kUvp2th 4y agoThis is taken into account with the volume change point. internal cost sets the lowest bar possible without a profit, it does not set what the price will be in the face of competition because companies charge as much as they can to maximize profit. That maximization either comes in the form of per-unit profit or volume profit.
- missedthecue 4y agoRight. Companies are compelled to competitively price their product. They still seek profit, but are not at will to price whatever they want. I'm not sure then how you arrive at the conclusion that "the free market trumpeteers are wrong." I don't think anyone disagrees that companies must price their product competitively and that they seek profit, those are uncontroversial facts.
- P5fRxh5kUvp2th 4y agoI'm going to repeat myself here. read the post again. It's there, that you cannot see it is neither a damnation of the point, nor a refutation of it. If you cannot find a way to respond to the actual point being made there is no discussion to be had here.