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>How much something costs is not what determines how much a company charges for something. It actually does - in a free market. That's, like, one of the main a

>How much something costs is not what determines how much a company charges for something. It actually does - in a free market. That's, like, one of the main arguments why capitalism is good for the population and not evil. But in a gate-kept oligopoly like phones, actors can abuse the system to squeeze more money out of consumers, leaving the corporations as sole beneficiaries. That's why this kind of stuff usually gets curbed in functioning democracies.

keerthiko 1y ago
I'm pretty sure in a free market, how much someone is willing to pay for something is what determines how much a company charges for something, not how much it cost to provide. We wouldn't have inflation of most goods/services if it was based on how much it cost to produce/provide.
- freedomben 1y ago
  You're right, but generally in a free market competition will force prices down until they are close enough to production costs that going lower risks loss. In practice this rarely happens because we don't really have "free" markets, but rather a weird hybrid plus legal landmines all over the place.
- bitdivision 1y ago
  True - how much someone is willing to pay matters. However in a competitive market, companies can’t just charge whatever people will pay. Competitors will undercut them, so prices should eventually align with the cost of production plus a reasonable margin.
- sigmoid10 1y ago
  Nope. In free market theory (=perfect competition, no barriers to entry, unlimited buyers etc.) prices are set as the equilibrium where demand equals supply. Supply ends up being equal to marginal cost in the mathematical limit. So in this limit, companies no longer make profit because if they charge cost+epsilon, they will loose demand to other suppliers. That's literally what you learn in economics 101. Of course in the real world you won't reach that limit, but getting to it within first order is still very good for consumers. The further you go away from this free market state, the more companies can extract what consumers "are still willing to pay" (irrespective of their cost) as you say. The opposite limit is the monopoly, where consumer welfare doesn't matter at all and companies can set their prices to maximise their own profit, because they don't need to adhere to any supply curve. They can literally charge extra until people go broke for inelastic demand curves like those of basic utilities (which phones are becoming more and more).
jxjnskkzxxhx 1y ago
> It actually does - in a free market Meaningless sentence.
phanimahesh 1y ago
> capitalism is good for the population and not evil This is the biggest lie that we keep telling ourselves. Capitalism is destroying the only place in the universe we can survive, and with the absurdly unequal wealth distribution and centralisation it enables, has caused more collective misery than any other idea in human history, in my opinion.
- ptaffs 1y ago
  I agree and piling on. Capitalism is good for those with capital, the wealthy few. Then wonder where they got the capital, and mostly it's something environmentally bad, like the extraction industry such as coal and oil.
  - mypornaccount 1y ago
    if you are commenting on this website you almost definitely fit the definition of the “wealthy few”.
FranzFerdiNaN 1y ago
Free markets have absolutely nothing to do with capitalism. You can have markets without capitalism. You can have free trade without capitalism, and you can have unfree trade with capitalism too. It’s one of the great achievements of capitalism that it managed to convince people that trade == capitalism and that without capitalism you are reduced to the Soviet Union, because no other options are possible.
- robertlagrant 1y ago
  > It’s one of the great achievements of capitalism that it managed to convince people that trade == capitalism and that without capitalism you are reduced to the Soviet Union, because no other options are possible. Never heard anyone say this before, although it may be pretty much the case[0]. [0] https://en.wikipedia.org/wiki/Foreign_trade_of_the_Soviet_Union https://en.wikipedia.org/wiki/Foreign_trade_of_the_Soviet_Un...
  - FranzFerdiNaN 1y ago
    If you criticise capitalism one of the most likely responses you're going to get is ''so you want to become communist like the SU"? And that wkkipedia article is of course not proving that trade equals capitalism (or are you saying that America stops being capitalistic if Trumps dream of a self-sufficient nation somehow succeeds?). Trade is trade. There was trade in the past when capitalism did not yet exist and there will be trade in the future when capitalism no longer exists.
    - robertlagrant 1y ago
      > Trade is trade. There was trade in the past when capitalism did not yet exist and there will be trade in the future when capitalism no longer exists. Indeed. I don't think anyone thinks otherwise. Fuedal lords traded. Totalitarian states traded. We know there was and is trade.
kaonwarb 1y ago
Only for commodities, and even then only sometimes.
cortesoft 1y ago
Even in a free market, not every product has perfect competition. Luxury brands always charge a lot more than it costs to make a product, because there are other factors that go into price.

keerthiko 1y ago

I'm pretty sure in a free market, how much someone is willing to pay for something is what determines how much a company charges for something, not how much it cost to provide. We wouldn't have inflation of most goods/services if it was based on how much it cost to produce/provide.

freedomben 1y ago
You're right, but generally in a free market competition will force prices down until they are close enough to production costs that going lower risks loss. In practice this rarely happens because we don't really have "free" markets, but rather a weird hybrid plus legal landmines all over the place.
bitdivision 1y ago
True - how much someone is willing to pay matters. However in a competitive market, companies can’t just charge whatever people will pay. Competitors will undercut them, so prices should eventually align with the cost of production plus a reasonable margin.
sigmoid10 1y ago
Nope. In free market theory (=perfect competition, no barriers to entry, unlimited buyers etc.) prices are set as the equilibrium where demand equals supply. Supply ends up being equal to marginal cost in the mathematical limit. So in this limit, companies no longer make profit because if they charge cost+epsilon, they will loose demand to other suppliers. That's literally what you learn in economics 101. Of course in the real world you won't reach that limit, but getting to it within first order is still very good for consumers. The further you go away from this free market state, the more companies can extract what consumers "are still willing to pay" (irrespective of their cost) as you say. The opposite limit is the monopoly, where consumer welfare doesn't matter at all and companies can set their prices to maximise their own profit, because they don't need to adhere to any supply curve. They can literally charge extra until people go broke for inelastic demand curves like those of basic utilities (which phones are becoming more and more).

jxjnskkzxxhx 1y ago

> It actually does - in a free market Meaningless sentence.

phanimahesh 1y ago

> capitalism is good for the population and not evil This is the biggest lie that we keep telling ourselves. Capitalism is destroying the only place in the universe we can survive, and with the absurdly unequal wealth distribution and centralisation it enables, has caused more collective misery than any other idea in human history, in my opinion.

ptaffs 1y ago
I agree and piling on. Capitalism is good for those with capital, the wealthy few. Then wonder where they got the capital, and mostly it's something environmentally bad, like the extraction industry such as coal and oil.
- mypornaccount 1y ago
  if you are commenting on this website you almost definitely fit the definition of the “wealthy few”.

FranzFerdiNaN 1y ago

Free markets have absolutely nothing to do with capitalism. You can have markets without capitalism. You can have free trade without capitalism, and you can have unfree trade with capitalism too. It’s one of the great achievements of capitalism that it managed to convince people that trade == capitalism and that without capitalism you are reduced to the Soviet Union, because no other options are possible.

robertlagrant 1y ago
> It’s one of the great achievements of capitalism that it managed to convince people that trade == capitalism and that without capitalism you are reduced to the Soviet Union, because no other options are possible. Never heard anyone say this before, although it may be pretty much the case[0]. [0] https://en.wikipedia.org/wiki/Foreign_trade_of_the_Soviet_Union https://en.wikipedia.org/wiki/Foreign_trade_of_the_Soviet_Un...
- FranzFerdiNaN 1y ago
  If you criticise capitalism one of the most likely responses you're going to get is ''so you want to become communist like the SU"? And that wkkipedia article is of course not proving that trade equals capitalism (or are you saying that America stops being capitalistic if Trumps dream of a self-sufficient nation somehow succeeds?). Trade is trade. There was trade in the past when capitalism did not yet exist and there will be trade in the future when capitalism no longer exists.
  - robertlagrant 1y ago
    > Trade is trade. There was trade in the past when capitalism did not yet exist and there will be trade in the future when capitalism no longer exists. Indeed. I don't think anyone thinks otherwise. Fuedal lords traded. Totalitarian states traded. We know there was and is trade.

kaonwarb 1y ago

Only for commodities, and even then only sometimes.

cortesoft 1y ago

Even in a free market, not every product has perfect competition. Luxury brands always charge a lot more than it costs to make a product, because there are other factors that go into price.