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Recognize that your position may have the following implication: if the producer cannot segment prices regionally, they may choose to charge the US price global
by czr80 14y ago
Recognize that your position may have the following implication: if the producer cannot segment prices regionally, they may choose to charge the US price globally - in this case they lose the marginal sales in poorer countries, and customers in poorer countries lose access to the product. No one wins in this scenario.
- zimbatm 14y agoThey may. Or they could drop the prices just enough that importing charges would make up the difference. It's just rules of the game. If they change, adapt your business model or go bust. But I'm not objective. For me segmenting (like DVD zones) always looked like and artificial way to milk more cash out of people.
- uvdiv 14y agoI read a hypothesis that airlines would be unsustainable without price discrimination. That is: if tickets were uniformly priced, there is no price at which ticket sales (demand) would exceed fixed costs. Without gouging business travelers, there wouldn't be enough revenue to subsidize the pleasure travelers, who would stop flying because they couldn't afford unsubsidized fares. And the industry would fail. This hypothesis is an extreme case, but it shows a mechanism how price discrimination can be welfare-increasing. That there can be tradeoffs between first-sale freedoms and societal wealth. (Because first-sale restrictions -- tying tickets to names, like a contract -- is what keeps secondary markets from equalizing airline fares).
- deleted 14y ago[deleted]
- svmegatron 14y agoIf you have a link to this, I would love to read it. It makes a lot of sense, and I'd be interested to read it in more detail
- uvdiv 14y agoThis is probably unsatisfying, but it's where I read about it: http://www.demarcken.org/carl/papers/ITA-software-travel-complexity/img22.html http://www.demarcken.org/carl/papers/ITA-software-travel-com... ToC: http://www.demarcken.org/carl/papers/ITA-software-travel-complexity/ITA-software-travel-complexity.html http://www.demarcken.org/carl/papers/ITA-software-travel-com... You could email the author and ask him, he seems to know.
- svmegatron 14y agoThank you!
- supercanuck 14y agoYou know who wins? The competitor who sees a market opportunity and their customers. I don't see any good reason for limiting secondary sales that doesn't reek of protectionism.
- glesica 14y agoNo, local competitors win out over multinationals. This is better in my opinion. Human capital and knowledge are more mobile than ever, and should be even more mobile (why can we import goods freely but importation of labor is tightly restricted?). This means that local companies in small and developing countries have enormous opportunities they did not have in the past. But multinationals that dump goods into these markets in the hope of securing market share for the future (when the markets actually become profitable for them) are a huge hurdle. I see no problem with the scenario you described outside of a few select industries. For example, pharma is problematic, but that market is so screwed up it is hardly worth talking about (publicly funded research being turned into private profits, etc.). Personally, I would rather see IP exceptions built into treaties. For example, if you refuse to sell product A in country B, then other companies can ignore your patents as long as they only sell in country B, etc.