4 ms·
This is a myth. Pricing is not deterministic like that. There are many reasons that a company may choose not to raise prices when it's costs go up.
by alangibson 2y ago
This is a myth. Pricing is not deterministic like that. There are many reasons that a company may choose not to raise prices when it's costs go up.
- exe34 2y agoPlus they're going to raise the price whenever they think they can get away with it anyway.
- alangibson 2y agoThis is closer to the real answer. The price is what the buyer is willing to pay.
- exe34 2y agothe price the buyer is willing to pay is whatever is cheaper than the effort of piracy.
- bequanna 2y agoI’d like to see a solid, peer reviewed study that states: in a normal, competitive market, business cost increases are not correlated with consumer price increases.
- mrtranscendence 2y agoI mean, obviously they're going to be related. Even in a perfectly competitive environment, if everyone's costs increase then so will the going price. The operative question is whether these increased costs will be passed onto the consumer in their entirety, and that much isn't necessarily clear. If they do pass those costs on 100%, then it's a tacit admission that they weren't pricing in a profit-maximizing way before the cost increase.
- alangibson 2y agoJust Google 'price elasticity' for one well known case where there is not necessarily a linear relationship.
- saaaaaam 2y agoWhen a similar (though lower) streaming levy was implemented in France, Spotify passed it onto consumers.
- seivan 2y ago[dead]
- JackSlateur 2y agoYes, a myth Just like VAT increases are not quickly followed by price increases A myth.
- alangibson 2y agoLol. No clue what you're talking about eh? VAT is not paid by businesses. It is paid directly by the consumer.
- JackSlateur 2y agoHere in France, VAT is a tax collected by the business. The myth is that a VAT increase (for instance, 7% => 10%, a couple of years ago) would shrink the business' margins : for 100€ paid by the customer, 93€ used to go to the business before the change, and only 90€ would go after the change. Of course, and this is a massive surprise, all prices increased : the product now costs 110€, with 99€ going to the business and 11€ as VAT So yeah, I'm pretty sure I know how my taxes work. That said, I can only speak about here in France, as I do not know how it works in other countries.