3 ms·

> that high prices drive more market entrants citation needed. I know this is dogmatic in laissez faire capitalist philosophy, but its really not clear that th

> that high prices drive more market entrants citation needed. I know this is dogmatic in laissez faire capitalist philosophy, but its really not clear that this occurs in all real markets.

holograham 13y ago
see my above comment on the law of supply and demand
- metaphorm 13y ago
  I know the basic laws of supply and demand. that is EXACTLY what I mean by dogmatic. you're quoting textbook theory at me as if the doctrine is self proving and as if I'm some sort of idiot for questioning whether your textbook doctrine applies in real life situations. I'm asking you to consider whether or not your abstract economic theory is really operating as you expect it to in this situation. this is the real world we're talking about. its not a free market. its not a toy example in a text book. between naturally occurring inefficiencies, legal interventions, and unforeseen outside forces it is highly doubtful that basic supply/demand price effects can be thought to apply reliably as the textbook describes.
  - holograham 13y ago
    Fair point. I elaborated more above. Think we are missing each other's next move in the reply delay chain. Sure the real world is not a perfect free market. Regulations and laws can be a huge hinderance to new market entrants...Uber ironically has felt that pain a ton with local taxi unions and laws
holograham 13y ago
I will further this a bit: there is a lag in new entrants that varies based on the industry (e.g. CapEx intensive industries need more time to ramp production). This clearly makes the case above (bottled water in disaster areas) even more of a red herring. Sometimes even the Red Cross has immense logistical trouble delivering supplies to catastrophe stricken areas. Obviously there is some need for humanitarian aid in the world (even in a purely free market society) General microeconomics holds that markets where suppliers are earning excess profit will be targeted by new market entrants for a piece of that action. You see that happen everyday. Dollar menus at fast food restaurants, pizza specials between dominos/papa johns/pizza hut, Lyft/Uber/Taxis, Andriod/iPhones, Kindle Fire/iPads, Amazon vs every supplier known to mankind, etc There are literally millions of real world examples of new market entrants seeking to cut costs for a increased share of a market. Amazon does this 2.5 million times a day apparently (source: http://qz.com/157828/amazon-changes-its-prices-more-than-2-5-million-times-a-day/ http://qz.com/157828/amazon-changes-its-prices-more-than-2-5...)

> that high prices drive more market entrants citation needed. I know this is dogmatic in laissez faire capitalist philosophy, but its really not clear that this occurs in all real markets.

holograham 13y ago

see my above comment on the law of supply and demand

metaphorm 13y ago
I know the basic laws of supply and demand. that is EXACTLY what I mean by dogmatic. you're quoting textbook theory at me as if the doctrine is self proving and as if I'm some sort of idiot for questioning whether your textbook doctrine applies in real life situations. I'm asking you to consider whether or not your abstract economic theory is really operating as you expect it to in this situation. this is the real world we're talking about. its not a free market. its not a toy example in a text book. between naturally occurring inefficiencies, legal interventions, and unforeseen outside forces it is highly doubtful that basic supply/demand price effects can be thought to apply reliably as the textbook describes.
- holograham 13y ago
  Fair point. I elaborated more above. Think we are missing each other's next move in the reply delay chain. Sure the real world is not a perfect free market. Regulations and laws can be a huge hinderance to new market entrants...Uber ironically has felt that pain a ton with local taxi unions and laws

holograham 13y ago

I will further this a bit: there is a lag in new entrants that varies based on the industry (e.g. CapEx intensive industries need more time to ramp production). This clearly makes the case above (bottled water in disaster areas) even more of a red herring. Sometimes even the Red Cross has immense logistical trouble delivering supplies to catastrophe stricken areas. Obviously there is some need for humanitarian aid in the world (even in a purely free market society) General microeconomics holds that markets where suppliers are earning excess profit will be targeted by new market entrants for a piece of that action. You see that happen everyday. Dollar menus at fast food restaurants, pizza specials between dominos/papa johns/pizza hut, Lyft/Uber/Taxis, Andriod/iPhones, Kindle Fire/iPads, Amazon vs every supplier known to mankind, etc There are literally millions of real world examples of new market entrants seeking to cut costs for a increased share of a market. Amazon does this 2.5 million times a day apparently (source: http://qz.com/157828/amazon-changes-its-prices-more-than-2-5-million-times-a-day/ http://qz.com/157828/amazon-changes-its-prices-more-than-2-5...)