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If another ecommerce platform wants to compete on price to encourage customers to shop there, they cannot. Any discounts will only go to the seller's bottomline

If another ecommerce platform wants to compete on price to encourage customers to shop there, they cannot. Any discounts will only go to the seller's bottomline. How is that helping customers?

endisneigh 3y ago
Amazon wants its customers to have the lowest available price. Their rule ensures that. It's very simple.
- dwallin 3y ago
  Clearly you are not a believer in free markets, because by the theory of free markets these prices would naturally arrive at the lowest possible price all on their own. You are right that this policy is very simple, it's very clear both mathematically and logically. Companies cannot lower their prices lower than their costs. If costs are variable across platforms but prices are fixed to a single value than this will de-facto result in INCREASED prices. If this policy causes someone to leave a platform, that STILL doesn't result in prices any lower than they would absent the rule. In fact, the sheer existence of the rule is a clear statement from Amazon that they believe they have significant and durable market pricing power, since if they didn't, this policy would clearly lead to sellers and buyers leaving their platform.
  - abduhl 3y ago
    What you are advocating for here is the opposite of a free market. Two independent parties contracting with each other and agreeing to a most favored nation clause without government intervention is a free market: either party may choose to leave the relationship. The government stepping in restrict parties’ ability to contract as they see fit is a restraint on the market. In a free market sellers will leave the Amazon ecosystem and move to a platform with less restrictive agreements, resulting in lower consumer prices (albeit with less availability). That’s exactly what GP is arguing. Obviously GP believes in a free market. Amazon’s belief in their own market power is irrelevant.

If another ecommerce platform wants to compete on price to encourage customers to shop there, they cannot. Any discounts will only go to the seller's bottomline. How is that helping customers?

endisneigh 3y ago

Amazon wants its customers to have the lowest available price. Their rule ensures that. It's very simple.

dwallin 3y ago
Clearly you are not a believer in free markets, because by the theory of free markets these prices would naturally arrive at the lowest possible price all on their own. You are right that this policy is very simple, it's very clear both mathematically and logically. Companies cannot lower their prices lower than their costs. If costs are variable across platforms but prices are fixed to a single value than this will de-facto result in INCREASED prices. If this policy causes someone to leave a platform, that STILL doesn't result in prices any lower than they would absent the rule. In fact, the sheer existence of the rule is a clear statement from Amazon that they believe they have significant and durable market pricing power, since if they didn't, this policy would clearly lead to sellers and buyers leaving their platform.
- abduhl 3y ago
  What you are advocating for here is the opposite of a free market. Two independent parties contracting with each other and agreeing to a most favored nation clause without government intervention is a free market: either party may choose to leave the relationship. The government stepping in restrict parties’ ability to contract as they see fit is a restraint on the market. In a free market sellers will leave the Amazon ecosystem and move to a platform with less restrictive agreements, resulting in lower consumer prices (albeit with less availability). That’s exactly what GP is arguing. Obviously GP believes in a free market. Amazon’s belief in their own market power is irrelevant.