4 ms·

It is of course not the same question: the article poses the question "would you like to have this nice thing?", and the reversed form I posed is "are you willi

It is of course not the same question: the article poses the question "would you like to have this nice thing?", and the reversed form I posed is "are you willing to pay for it?" My immediate observation is that the majority of people will tend to say "yes" to the first and "no" to the second, and what we can learn from this is that mostly people tend to want. I think you have rather casually tossed out the proposition that the status quo brings the customer negative value, without supplying any justification for that claim. I also think that your proposal of passing legislation to force all merchants to raise their lowest prices is unlikely to prove popular. (This proposal is commonly referred to as "increasing sales tax", and seems like it would be regressive in nature)

AnthonyMouse 11y ago
> It is of course not the same question: the article poses the question "would you like to have this nice thing?", and the reversed form I posed is "are you willing to pay for it?" It isn't a matter of willingness to pay. If the seller doesn't want you to "buy" something (e.g. privacy) then they can set the price arbitrarily high so that you won't. > I think you have rather casually tossed out the proposition that the status quo brings the customer negative value, without supplying any justification for that claim. Why do you imagine the merchant is offering the "discount" if it isn't net profitable? When the merchant makes money by exploiting the data they collect, whose pocket does that money come out of? > I also think that your proposal of passing legislation to force all merchants to raise their lowest prices is unlikely to prove popular. I don't recall proposing that merchants be required to raise their prices, only that the prices they charge be the same regardless of whether customers use loyalty cards.
- asuffield 11y ago
  Here's how "net profitable" works. Before: Merchant buys 5 units of item at $1 each and sells them at $3. Supplier makes $5 in revenue. 5 customers each get one item at $3. Merchant makes a profit of $10. After: Merchant buys 20 units of item A at $1 and sells them at $2. Supplier makes $20 in revenue. 20 customers each get one item at $2. Merchant makes a profit of $20. Net profit: merchant is $10 richer, supplier is $15 richer, 20 customers are each $1 richer. People have different resources and trade between them generates wealth. More trade generates more wealth. This is not a zero-sum game.
  - AnthonyMouse 11y ago
    All your numbers are saying is that more trade occurs when middle men charge prices closer to their costs. But that isn't the problematic scenario. It's this one: Before: Merchant buys 20 units of item A at $1 and sells them at $2. Supplier makes $20 in revenue. 20 customers each get one item at $2. Merchant makes a profit of $20. After: Merchant buys 15 units of item A at $1 and sells them at $3. Supplier makes $15 in revenue. 15 customers each get one item at $3. Merchant makes a profit of $30. Net profit: merchant is $10 richer, suppler is $5 poorer, 15 customers are each $1 poorer and five would-be customers can no longer afford the item. The trade-maximizing margin for the merchant is the lowest possible margin, which is what maximizes overall utility because it increases the number of transactions without affecting the net utility per transaction. But the merchant isn't interested in maximizing trade, the merchant is interested in maximizing his own profit. The way a merchant maximizes his own profit is to reduce margins on goods sold to price sensitive customers and raise margins on goods sold to price insensitive customers. So your theory has to be that giving merchants more information will cause them to reduce the prices of items sold to price sensitive customers more than they raise the price of items sold to price insensitive customers. But selective pressure already destroys merchants who charge high margins to highly price sensitive customers. Anyone who does that loses all their business as soon as a competitor offers to sell for less. By contrast, merchants who charge slightly profitable but not maximally profitable prices to price insensitive customers can stay in business indefinitely, to the benefit of everyone but themselves, regardless of the prices charged by competitors. Which implies that giving better pricing information to the merchants who have survived market forces will cause them to raise prices more than lower them.

AnthonyMouse 11y ago

> It is of course not the same question: the article poses the question "would you like to have this nice thing?", and the reversed form I posed is "are you willing to pay for it?" It isn't a matter of willingness to pay. If the seller doesn't want you to "buy" something (e.g. privacy) then they can set the price arbitrarily high so that you won't. > I think you have rather casually tossed out the proposition that the status quo brings the customer negative value, without supplying any justification for that claim. Why do you imagine the merchant is offering the "discount" if it isn't net profitable? When the merchant makes money by exploiting the data they collect, whose pocket does that money come out of? > I also think that your proposal of passing legislation to force all merchants to raise their lowest prices is unlikely to prove popular. I don't recall proposing that merchants be required to raise their prices, only that the prices they charge be the same regardless of whether customers use loyalty cards.

asuffield 11y ago
Here's how "net profitable" works. Before: Merchant buys 5 units of item at $1 each and sells them at $3. Supplier makes $5 in revenue. 5 customers each get one item at $3. Merchant makes a profit of $10. After: Merchant buys 20 units of item A at $1 and sells them at $2. Supplier makes $20 in revenue. 20 customers each get one item at $2. Merchant makes a profit of $20. Net profit: merchant is $10 richer, supplier is $15 richer, 20 customers are each $1 richer. People have different resources and trade between them generates wealth. More trade generates more wealth. This is not a zero-sum game.
- AnthonyMouse 11y ago
  All your numbers are saying is that more trade occurs when middle men charge prices closer to their costs. But that isn't the problematic scenario. It's this one: Before: Merchant buys 20 units of item A at $1 and sells them at $2. Supplier makes $20 in revenue. 20 customers each get one item at $2. Merchant makes a profit of $20. After: Merchant buys 15 units of item A at $1 and sells them at $3. Supplier makes $15 in revenue. 15 customers each get one item at $3. Merchant makes a profit of $30. Net profit: merchant is $10 richer, suppler is $5 poorer, 15 customers are each $1 poorer and five would-be customers can no longer afford the item. The trade-maximizing margin for the merchant is the lowest possible margin, which is what maximizes overall utility because it increases the number of transactions without affecting the net utility per transaction. But the merchant isn't interested in maximizing trade, the merchant is interested in maximizing his own profit. The way a merchant maximizes his own profit is to reduce margins on goods sold to price sensitive customers and raise margins on goods sold to price insensitive customers. So your theory has to be that giving merchants more information will cause them to reduce the prices of items sold to price sensitive customers more than they raise the price of items sold to price insensitive customers. But selective pressure already destroys merchants who charge high margins to highly price sensitive customers. Anyone who does that loses all their business as soon as a competitor offers to sell for less. By contrast, merchants who charge slightly profitable but not maximally profitable prices to price insensitive customers can stay in business indefinitely, to the benefit of everyone but themselves, regardless of the prices charged by competitors. Which implies that giving better pricing information to the merchants who have survived market forces will cause them to raise prices more than lower them.