4 ms·

Customer is willing to pay 10k. Supplier will charge 10k. Customer is willing to pay 10k, state is willing to pay 5k. Supplier will charge 15k.

• ta1243 1y ago
  That applies with inelastic goods - land for example - where supply can't increase Assuming the base cost is 8k Supplier A and Supplier B charge 15k and have 100 customers between them, making 350k each Supplier B decides to undercut Supplier A, and charge 14k, and get all the customers, making 600k profit Customer might be willing to pay 10k, but if there's two identical quotes, one for 10k and one for 9k they'll go for the 9k
  • robertlagrant 1y ago
    > Customer might be willing to pay 10k, but if there's two identical quotes, one for 10k and one for 9k they'll go for the 9k But you see the point. There's a comfortable cushion where everyone can make more money off the taxpayer and have an easier time of it. Spend a bit of it on better marketing to elevate yourself and justify the higher price in people's minds.
    • ta1243 1y ago
      Only if you believe that the invisible hand of the market doesn't work
      • robertlagrant 1y ago
        I'm not sure government incentives allow the free market to do its work, then. Why would you think it would?
        • ta1243 1y ago
          government incentives help to reduce the externalities You seem to think that two companies selling product A will rather sell 50 for $10 per unit profit than 100 for $9 per unit profit because it's easier. I mean, it's a view, sure.
          • robertlagrant 1y ago
            It's not my view, though. I already said what I think is more likely to happen.
          • antisthenes 1y ago
            > You seem to think that two companies selling product A will rather sell 50 for $10 per unit profit than 100 for $9 per unit profit because it's easier. If the numbers are closer, then that's exactly what happens. Would you rather sell 50 units for $19 per unit or 100 for $10 per unit? Option 1 gives you way less overhead and headache with cheap-o customers.