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Hello, so another blog from me. I suppose I complain a lot of things, and now that Christmas is over I can do it guilt free. Now the topic is sales. Sales (as in something costs a $100 but is 50% off for $50) are the most poisonous strategy to limit consumer choice as well as consumer knowledge in today's economy.
Sales are a little bit less evident in things that operate in monopolistic markets (natural or not)... Which if you notice gaming, most things sold operator in markets with economies of scale, therefore there a few providers for one service. How many CPU manufacturers are there, how many GPU manufacturers are there, how many monitor manufacturers, etc. Like iPod's and most other electronics, if we live on the same part of the planet we will likely buy our electronics for about the same price.
An i5 2500k will likely never go below $180 or above $250 in price (yes, using an old processor, bear with me). We have knowledge of what the good does, and what it usually sells for so we can create an educated decision whether to purchase it or not. For example, if you bought this processor, you can go tell me, "Oh yes, this is a good processor, go buy it!".
The issue starts here. You go to a mall, and you see a pair of jeans for $300. Your friend bought these for $100 dollars when they were on sale, and said for that price they are a "good bang for buck". Now they are $300 dollars, what do you do? You have a few options:
1) You can buy the jeans for $300 and hope they justify the cost.
2) You can go spend hours looking in other stores or the internet to find similar jeans elsewhere that are cheaper because they are currently on sale.
3) You can buy cheaper pants that you have no knowledge of but they are $100 instead of $300.
It's almost hard to explain why it's so stupid... But do you see how a simple example like this makes it extremely difficult for a consumer to purchase his good? Wasn't initially the goal of democracy to create like a free-market with no barriers to trading... Instead all of this bullshit to consumers?
We understand there are different markets: Natural monopolies, oligopolies, monopsonies/oligopsony, workably competitive, and perfectly competitive markets. We know that the "best" markets in terms of benefit to consumers (which is the goal), are perfectly competitive markets... Why are we allowing sales to against what a perfectly competitive market strives to achieve. Sales should be banned.
If every manufacturer of a good had a legal obligation to say periodically how much he wanted his good sold for, and it had to be that way, there would be much more knowledge about the good's within the market. Because prices fluctuate so widly with everything (home renovations, clothes, jewelry, body-care products, sport equipment) people can never decide on what is the best (two graphics cards with the same specs, but each week one is cheaper than the other, which one do you go buy if you ask someone)... And it is not only that. It is also important to take into account that by doing this it is also a lot easier to consumer discriminate. I could get into price discrimination, but I assume people who have any arguments against me already know what it means, and not the mention it could start a long topic in its own regard as well.
So I did quickly explained why sales are bad for consumers. And now simple logic states this: The consumers elect the government, and the government is there to make the lives of consumers better. Disagree with me if you will, but what I say is true. In a democracy you will generally vote for the party that shares your interests and represents your views on what you wish your country to become. So why don't consumers just say, hey, no more sales. "No store is allowed to put any discounts on goods ever. There will be prices set monthly or set once every two months, these will remain constant... And they will be clearly labelled for all customers to see." Obviously the regulation isn't as easy as that to put into place, and I know there are a lot of factors take into account... But all of these factors seem workable, and overall this will yield in the long-term a benefit to society.
So I am wondering what you guys think about why sales have not yet been illegalized, as well as what complications are preventing them from even being considered illegalized. This is such a broad topic and I don't feel like I got to cover it like I wanted to, but I would love if some people offered some inputs and we could have a discussion/debate going - it would also allow us to centralize thought on more specific points.
Cheers!
  
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Try buying a car, that'll really flip your lid.
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On December 28 2013 11:05 Burrfoot wrote:
Try buying a car, that'll really flip your lid.
Haha I am quite aware. It's just weird you know. Back home in Slovakia, if something is listed at a store as 3 euro, it actually costs 3 euro. As a customer I should know exactly how much it's going to cost... Not the:
1) Let's add GST (wtf why is this not included in price)
2) How about some PST (luckily living in Alberta)
3) Shipping and Handling - sure why not?
4) Custom fees - okay
5) Carbon Emission Tax - more the marrier?
6) Administration charge - cool cool
7) Convience charge - .... -.-
8) OH YOU WANT TIP TOO? WELL FUCK YOU ASSHOOOO
Why don't they just tell me how much I'm going to pay at the end instead of doing this. I know obviously it's to make more money by making whatever I'm buying appear less expensive than it really is... But why is that allowed? Boggles my mind really.
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For the jeans example, you should consider a 4th option of not buying the jeans and waiting until they are on sale.
Also, the concept of a perfectly competitive market contains too many assumptions to be realised in the real world.
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On December 28 2013 11:17 cravin74 wrote:
For the jeans example, you should consider a 4th option of not buying the jeans and waiting until they are on sale.
Also, the concept of a perfectly competitive market contains too many assumptions to be realised in the real world.
But see that's silly. Why should you only be able to buy these jeans for 1/3 of the price 3 times a year when it costs the manufacturer the exact same amount to produce a pair - regardless what time of year it is. And you completely missed the point of this thread if you're bringing up an example I addressed opposed to what I am arguing (which is not how you should proceed if the pants you want aren't on sale).
You are correct that the perfectly competitive market has assumptions, and realistically a perfectly competitive market is unattainable... But the closer we get to it the better, would you not agree? And certainly price discrimination and concealment of information are a detriment to becoming closer to a perfectly competitive market.
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On December 28 2013 11:22 FiWiFaKi wrote:Show nested quote +On December 28 2013 11:17 cravin74 wrote:
For the jeans example, you should consider a 4th option of not buying the jeans and waiting until they are on sale.
Also, the concept of a perfectly competitive market contains too many assumptions to be realised in the real world. But see that's silly. Why should you only be able to buy these jeans for 1/3 of the price 3 times a year when it costs the manufacturer the exact same amount to produce a pair - regardless what time of year it is. And you completely missed the point of this thread if you're bringing up an example I addressed opposed to what I am arguing (which is not how you should proceed if the pants you want aren't on sale). You are correct that the perfectly competitive market has assumptions, and realistically a perfectly competitive market is unattainable... But the closer we get to it the better, would you not agree? And certainly price discrimination and concealment of information are a detriment to becoming closer to a perfectly competitive market.
You make some assumptions, why is perfect competition good? why is price discrimination bad?
Perfect competition can only occur if goods sold are the same. So instead of a many different styles/brands of jeans, you can now only choose one.
Ya price discrimination will charge more to those who are willing to pay, but it also allows people who previously were unable to buy access to lower prices.
Also didn't J.C. penny try the no sales thing? instead of low and high prices they made theirs average. Turns out consumers didn't like that and they lost a whole bunch of money. Turns out consumers like sales, like they idea that they found something good.
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On December 28 2013 11:30 DeltaSigmaL wrote:Show nested quote +On December 28 2013 11:22 FiWiFaKi wrote:On December 28 2013 11:17 cravin74 wrote:
For the jeans example, you should consider a 4th option of not buying the jeans and waiting until they are on sale.
Also, the concept of a perfectly competitive market contains too many assumptions to be realised in the real world. But see that's silly. Why should you only be able to buy these jeans for 1/3 of the price 3 times a year when it costs the manufacturer the exact same amount to produce a pair - regardless what time of year it is. And you completely missed the point of this thread if you're bringing up an example I addressed opposed to what I am arguing (which is not how you should proceed if the pants you want aren't on sale). You are correct that the perfectly competitive market has assumptions, and realistically a perfectly competitive market is unattainable... But the closer we get to it the better, would you not agree? And certainly price discrimination and concealment of information are a detriment to becoming closer to a perfectly competitive market. You make some assumptions, why is perfect competition good? why is price discrimination bad? Perfect competition can only occur if goods sold are the same. So instead of a many different styles/brands of jeans, you can now only choose one. Ya price discrimination will charge more to those who are willing to pay, but it also allows people who previously were unable to buy access to lower prices. Also didn't J.C. penny try the no sales thing? instead of low and high prices they made theirs average. Turns out consumers didn't like that and they lost a whole bunch of money. Turns out consumers like sales, like they idea that they found something good.
This is really the most basic modern microeconomics theory there is. I am assuming the reader has some economic background as these are points that are not really negotiable.
Saying price discrimination is not bad in economics is as bad thing is like saying atoms don't exist in physics. Not really interested in explaining these concepts, sorry.
1) You can't make prices average. It's not like a firm will sell above cost to one consumer, and below cost to the other consumer. Instead, it will just sell above to some of the consumers and not to the other consumers to maximize profit.
2) Well no, technically you'd have perfect competition for every good... which obviously is not possible, but we still want to get as close to it as possible for each individual good and as far away as possible from monopolies. The closer you get to perfect competition the less allocative and productive inefficiencies you have. (Good thing).
There, quick explanation to why you are not correct.
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Seems like a minor problem. I think you're right that messing with the information pipeline hurts the consumer (and benefits the producer and the distributor) but ultimately it's not that bad.
You say that the government is supposed to make the life of the consumer (I'm guessing you meant voter or citizen) better.
But IMO democracy is better seen as the struggle between an uninformed majority and an informed minority. It is crucially important for the uninformed majority to keep the number of issues at a minimum, since its attention is limited. Challenging an informed and powerful group for a small payoff is a strategic mistake.
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On December 28 2013 11:44 hypercube wrote:
Seems like a minor problem. I think you're right that messing with the information pipeline hurts the consumer (and benefits the producer and the distributor) but ultimately it's not that bad.
You say that the government is supposed to make the life of the consumer (I'm guessing you meant voter or citizen) better.
But IMO democracy is better seen as the struggle between an uninformed majority and an informed minority. It is crucially important for the uninformed majority to keep the number of issues at a minimum, since its attention is limited. Challenging an informed and powerful group for a small payoff is a strategic mistake.
Thank you for the correction, that is indeed what I meant.
Two questions if I may. Why do you believe that messing with the information pipeline is not that bad? Definitely not saying you're wrong, but it seems to pose many problems to me. If people don't accurately know the cost of a good, how can they make a logical economical decision when making a purchase?
My other question was if you'd mind expanding on your last paragraph. I found it quite interesting but I not enough detail for me to understand exactly where you were going. Thanks!
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So you took to arguing against sales, but failed to read up on the largest case of a company going against sales? It made a pretty big splash and is a pretty good indication of what misguided intentions will do. Oftentimes sales are the reason for consumers coming to buy in the first place. Some firms will put out loss leaders in hopes people will come in and buy other goods as well. What is your opinion on this? And honestly, don't compare economics and physics. One is well defined, the other had two Nobel winners, one arguing for efficient markets, the other against, both winning.
random jcpenny article: http://www.forbes.com/sites/barbarathau/2013/05/08/another-reason-j-c-penneys-no-sale-strategy-flopped-digital-deals-are-proliferating/
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Illegal and consumer unfriendly are 2 different things
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On December 28 2013 12:07 thezanursic wrote:
Illegal and consumer unfriendly are 2 different things
As are "Should be" and "Are". I'm think it's pretty crazy to completelly ban sales, I can't see how that would work, but there's nothing conceptually wrong with the way he said it.
What I do find very annoying and I'm glad it's not allowed here is adding all those extras and taxes. It's so much easier when you pay what's listed. I'm also very annoyed by places that don't list prices and you have to find a machine to read the code to find out how much something costs.
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On December 28 2013 12:06 DeltaSigmaL wrote:So you took to arguing against sales, but failed to read up on the largest case of a company going against sales? It made a pretty big splash and is a pretty good indication of what misguided intentions will do. Oftentimes sales are the reason for consumers coming to buy in the first place. Some firms will put out loss leaders in hopes people will come in and buy other goods as well. What is your opinion on this? And honestly, don't compare economics and physics. One is well defined, the other had two Nobel winners, one arguing for efficient markets, the other against, both winning. random jcpenny article: http://www.forbes.com/sites/barbarathau/2013/05/08/another-reason-j-c-penneys-no-sale-strategy-flopped-digital-deals-are-proliferating/
Well here's the deal. If one firm has sales, and the other has no sales, more people will come to the firm that has sales. Hence regardless of what the other firm chooses... It will be beneficial for any firm to choose to have sales. See Game Theory on more of that.
So this tells us that if the market is allowed to act on its own, it will not yield an efficient outcome. When there is a market failure, as I understand, we should attempt to correct the failure as long as the cost to fix the failure is less than the benefit received from the fixing the failure.
In this case, I'd think that sales create a fairly large market failure because it creates allocative and static inefficiencies based on the fact that people are not given full information - and information is very rapidly changing due to occurrence of sales. And I believe that the cost to regulate a no-sales policy would be less than the benefit received to the economy.
Now that is my argument, and its likely its flawed as no-sales are still not implemented, however I am looking for a flaw in my thinking, and as to why sales are a good thing for the society as a whole.
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On December 28 2013 12:17 SKC wrote:Show nested quote +On December 28 2013 12:07 thezanursic wrote:
Illegal and consumer unfriendly are 2 different things As are "Should be" and "Are". I'm think it's pretty crazy to completelly ban sales, I can't see how that would work, but there's nothing conceptually wrong with the way he said it. What I do find very annoying and I'm glad it's not allowed here is adding all those extras and taxes. It's so much easier when you pay what's listed. I'm also very annoyed by places that don't list prices and you have to find a machine to read the code to find out how much something costs.
See, you like many others hate when prices are not listed. Some places don't even have the scanners and you physically have to go up to a cashier and ask them to scan it for you (I've had this happen, and sometimes the line is too long, so you say fuck it, and buy it anyway, and be surprised at the price after), why is that legal? What complications would be created by making this practice illegal?
And by the same extention, why can't we illegalize all the added extras to prices, as well as sales... This will give us a price that doesn't arbitrarily change, and the price better reflects the cost to produce the good.
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the fewer things you buy, the less you have to worry about this
who the fuck in their right mind would spend 300 on some jeans anyway
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On December 28 2013 11:51 FiWiFaKi wrote:Show nested quote +On December 28 2013 11:44 hypercube wrote:
Seems like a minor problem. I think you're right that messing with the information pipeline hurts the consumer (and benefits the producer and the distributor) but ultimately it's not that bad.
You say that the government is supposed to make the life of the consumer (I'm guessing you meant voter or citizen) better.
But IMO democracy is better seen as the struggle between an uninformed majority and an informed minority. It is crucially important for the uninformed majority to keep the number of issues at a minimum, since its attention is limited. Challenging an informed and powerful group for a small payoff is a strategic mistake.
Thank you for the correction, that is indeed what I meant. Two questions if I may. Why do you believe that messing with the information pipeline is not that bad? Definitely not saying you're wrong, but it seems to pose many problems to me. If people don't accurately know the cost of a good, how can they make a logical economical decision when making a purchase?
They can't, at least not as well as they would with more stable prices. I actually agree that it hurts buyers. But compared to some other business practices this is a very unimportant problem.
My other question was if you'd mind expanding on your last paragraph. I found it quite interesting but I not enough detail for me to understand exactly where you were going. Thanks!
I think the Stop SOPA campaign illustrates the idea quite well. There's a piece of legislation that was universally unpopular but almost passed because it served the interests of a small, well-connected minority.
If you want to create the kind of public campaign that killed SOPA you need to inform people on why the current system hurts their interests. It costs you time and it takes the wider public's attention.
There are plenty of issues where the interests of a small minority are pitted against that of the majority. Some of the major ones would be food safety, mass surveillance, IP rights, drug development (and advertising) or global warming. It is in this context that sales or price discrimination are not that bad.
You could say that just because there are worse problems it doesn't mean we should let this one go. But the point you can't fight all battles in politics. It takes time to explain exactly why the minority's position hurts the majority. It takes sustained effort from the majority to make sure some legislation isn't reversed at the last moment. Or as in the case of IP protection brought back through different means after the public outcry has died down.
I mean, I guess if it was up for a vote I be for banning sales, although I'd have to think about it a bit. But if I was the president of a recording company, or say the CEO of a tobacco company in the early 90s, I would be really, really happy if the public was preoccupied with banning sales instead of looking at what I was doing.
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On December 28 2013 12:32 sam!zdat wrote:
the fewer things you buy, the less you have to worry about this
who the fuck in their right mind would spend 300 on some jeans anyway
1) Not the point of this thread T__T
2) More people than you'd think.
3) The more knowledge you have, the quicker you can made decisions on what you buy, the less you need to worry.
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the knowledge you need is that consumerism is the orgiastic cult of false idols and that you can better achieve happiness by getting away from all that bullshit so you can stop worrying about whether or not you are being 'cheated' by 'imperfect information' because of course you are, that's the point. What a strange game, the only winning move is not to play
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Hong Kong9179 Posts
having perfect information that 300 dollar jeans are the same as 20 dollar jeans won't prevent people from buying the 300 dollar jeans. not everyone has the same perceived form of rationality that you may think is optimal.
and if people are going to be dumb with their money, so be it.
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On December 28 2013 12:46 sam!zdat wrote:
the knowledge you need is that consumerism is the orgiastic cult of false idols and that you can better achieve happiness by getting away from all that bullshit so you can stop worrying about whether or not you are being 'cheated' by 'imperfect information' because of course you are, that's the point. What a strange game, the only winning move is not to play
If we took the philosophical approach to this problem, we would never arrive at a solution. At least that's what I found out from every philosophical debate I've ever had in my life... It depends how you look at it, and what your goal... And since the goal for you in your life can be anything, there is never a right answer. So I suppose the underlying assumption I am making is that we are going to assume the system where people want the most things, and the most utility out of their things.
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EPT
