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On December 28 2013 13:02 Hilltop_Razorback wrote:
Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh.
Sorry there was just a lot of different material covered that I may have been mixing myself up.
Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store.
Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches.
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On December 28 2013 13:04 FiWiFaKi wrote:Show nested quote +On December 28 2013 13:02 MichaelDonovan wrote:
And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears.
I just don't get how you can talk about how democracy is supposed to create a free market and shit but in the same breath talk about how the government should regulate pricing on products.
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On December 28 2013 13:15 DeltaSigmaL wrote:Show nested quote +On December 28 2013 13:11 FiWiFaKi wrote:On December 28 2013 13:06 DeltaSigmaL wrote:
you're right that the concept isn't entirely foreign. For example, it's illegal to take a 100$ good, raise the price to 200$, then cut it back to 100$ and claim 50% off. + Show Spoiler +However this is what sales practically do. Mall clothing stores have a sale practically every weekend (friday-sunday)... And is that not essentially the same thing as what you just mentioned? On December 28 2013 13:06 itsjustatank wrote:Show nested quote +On December 28 2013 13:04 FiWiFaKi wrote:On December 28 2013 13:02 MichaelDonovan wrote:
And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears. so. more government. in fact, central planning. Yes, more government. I guess more government just means more bad to most people. I suppose I can't what you will think about that... But the government does good too. That's true, but their "normal" price is inflated, so they can't be nailed like that. Like i said, JC penny went with no inflation "normal" pricing allowing their "normal" to be lower, but not lower than a sale. Items on sale often are sold for loss, with retail simply trying to attract customers to show up, perhaps purchase something else (more expensive). You could even say that those who only buy sales save more money than if no sales were available ever.
But see the problem with the system currently in place is this:
I can spend 10 hours doing research to find a good that is on sale, wait for the right time, go to the right retailer, etc... To buy that good for $90 when it costs $100 to produce. However since everyone is operating on these sales, the average amount someone is spending for this good is $130.
Or I can have a price of $110 everywhere I go. Sure I pay $20 more than if there was a sale, but I spend much less time looking for my good since wherever I go, it will likely be offered for the same prices.
If you had infinite time to find what you want to buy, then your theory works.... But if I want to buy a t-shirt, I'd much rather just buy it than doing research. Even the people that try hard to find sales probably don't find sales for most goods they buy, they only look for the goods that matter a lot to them.
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On December 28 2013 13:18 MichaelDonovan wrote:Show nested quote +On December 28 2013 13:04 FiWiFaKi wrote:On December 28 2013 13:02 MichaelDonovan wrote:
And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears. I just don't get how you can talk about how democracy is supposed to create a free market and shit but in the same breath talk about how the government should regulate pricing on products.
Alright, apologies. Not create a free market, but create the most efficient market is what I meant to say.
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On December 28 2013 13:21 FiWiFaKi wrote:Show nested quote +On December 28 2013 13:18 MichaelDonovan wrote:On December 28 2013 13:04 FiWiFaKi wrote:On December 28 2013 13:02 MichaelDonovan wrote:
And who do you expect to actually do the banning? The government? Do you want the government to tell companies how much they're allowed to charge for their products, and how often they're allowed to change the price? That seems a little odd to me. A regulating body created by the government. The government would not be telling the companies how much they can charge. There would be a law put into place to ensure there are no sales or hidden pricing, and a Market Surveillance Administrator to enforce it. It happens and it has happened in many industries throughout history as well as today. It really is not as foreign of a concept as it appears. I just don't get how you can talk about how democracy is supposed to create a free market and shit but in the same breath talk about how the government should regulate pricing on products. Alright, apologies. Not create a free market, but create the most efficient market is what I meant to say.
Well I think maybe the most efficient market would probably not use artificial currency with fluctuating value. It would be one that uses something with a fixed value like gold. Ron Paul can tell you all about that.
And I don't get why you think democracy specifically should create the most efficient market. I figure democracy -> free market, something else -> your market. I dunno.
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wait, what is wrong with selling at 105 to gain publicity then raising to 200? The good is now worth more because people know about it...
edit: don't take the gold bait, it would peg currency to random mining activity. Its bad and at heart everyone knows its bad.
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Hong Kong9148 Posts
gold doesn't have a fixed value.
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Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (:
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Paper money (or money with a controlled supply) should technically have the most stable prices of any currency.
As long as the government does what it needs to, it is effective. The stability of currency in Canada has been much better compared to something like gold or bitcoin. There needs to be a proper government in place to ensure to issues arise however.
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1001 YEARS KESPAJAIL22272 Posts
I actually do own $300 jeans and like it so whatevs I guess
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On December 28 2013 13:36 lichter wrote:
I actually do own $300 jeans and like it so whatevs I guess
Now you probably understand why you lost TLCMAT... ):
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On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote:
Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches.
Yeah no worries; this is a blog, not a policy proposal =D
So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance.
This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system.
Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach.
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On December 28 2013 13:39 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote:
Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches. Yeah no worries; this is a blog, not a policy proposal =D So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance. This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system. Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach.
See, I don't think that the manufacturers controlling the price would be that big of an issue personally. Let's assume the good was sold to retailers for $100 each, and now the next month it will be sold for $150 dollars each. Now the nice thing here is that even if the price now rose $50, at least the price everywhere will be more-or-less $50 more. So it doesn't really matter where you go buy it, the good will cost the same anywhere,
However, I don't believe the fluctuations would be very sharp because:
1) Menu Cost would discourage manufacturers to do this.
2) Companies have stock in the warehouse that they can still expend.
3) Retailers would not respond to price change instantaneously.
So I think if a cycle of one price a month is set (this number can be altered or there can be 3 different numbers for different types of companies)... A manufacturer changing the price would not see the price respond super drastically, and the consumers would see the overall trend in price, and anyway, I just don't feel like it'd be a very effective strategy. All the regulation and the Czar's Office (haha) would not be needed.
And hey, thanks! I like discussing with people to arrive at new conclusions together. I know it can get a bit heated at times, but no harm meant (:
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I completely agree with this. I can't comment much on details as I don't have much idea how the legality would work here, but sales are quite annoying- Steam sales are the death of me, especially after I buy something for full price...
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Keep in mind that I have never formally studied economics.
People like sales. Simply put, that is why they stick around.
Sales makes people feel like they are winning - beating their friends, their neighbors, the other shoppers. People are complex and, in many cases, confusing; that is why we have people looking for sales on items that are used primarily to demonstrate wealth. Advertising and media have created an atmosphere of consumer-insecurity. You have to (silently) beat your friends and you definitely have to beat that bitch over there who is eyeing your boyfriend. You have to beat the person you walk past who has pricier clothes than you, even. The insecurity also probably comes from income and wealth problems - most of the people that I know who seem to care the most about pricey items are those from poorer backgrounds. Take a look at the perpetually impoverished black community and how that juxtaposes with name-brand shoe sales. Ever notice all those social media posts of presents, new phones, new cars, prom night, etc? They are often veiled as complaint, criticism, or discussion, but it's not about that at all. It's a ridiculous rat race.
Racism aside, this all ties back into sales because I'm trying to illustrate my point that consumer culture creates a competition, and sales allow a way to one-up your competitors.
There are practical benefits to sales too, but they are mostly consequences of the system that we run. Companies like to not have a ton of inventory in their shops at the end of their fiscal years. Also, right about now I would imagine that demand is rather low since many people are probably broke after spending a lot of money during Christmas to impress their family and convince their children that they are not poor. With extra supply and lower demand (my gut tells me that gift cards don't make up for everyone being broke, though I have no evidence) prices would logically lower right now, which I assume is the inspiration for your blog. And also remember, as others have pointed out, that sales are also a way to get customers in your store and that supply and demand are not static, and that consumers are dumb and like to think they are getting a steal even when they are not.
I think it's hard for many people to really understand the mindset behind this bizarre culture that nobody in real life (at least that I know) seems to talk about. I like topics like these because infantile basic "issues" like abortion and gay-equality seem to dominate these kinds of discussions and I think this is MUCH more important (as most people worth your time are already on the same side of popularized social issues as you) for society as a whole.
To be honest I think the best way to fix this is to create a whole bunch of radical changes to how we distribute goods and that this wouldn't be a problem under that system, but I don't want to derail the thread with socialism. I do find the idea of sort of fixing costs to be entertaining, but I think it would never get a lot of support among the general people without a lot of other ideas gaining ground, and in my country even touching this topic would instantly be decried as SOSHURLISM.
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Well, if you get ban sales, might as well ban advertising and marketing, keywords etc as well since they also effect consumer behaviour that you mentioned in your premise.
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On December 28 2013 13:53 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:39 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote:
Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches. Yeah no worries; this is a blog, not a policy proposal =D So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance. This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system. Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach. See, I don't think that the manufacturers controlling the price would be that big of an issue personally. Let's assume the good was sold to retailers for $100 each, and now the next month it will be sold for $150 dollars each. Now the nice thing here is that even if the price now rose $50, at least the price everywhere will be more-or-less $50 more. So it doesn't really matter where you go buy it, the good will cost the same anywhere, However, I don't believe the fluctuations would be very sharp because: 1) Menu Cost would discourage manufacturers to do this. 2) Companies have stock in the warehouse that they can still expend. 3) Retailers would not respond to price change instantaneously. So I think if a cycle of one price a month is set (this number can be altered or there can be 3 different numbers for different types of companies)... A manufacturer changing the price would not see the price respond super drastically, and the consumers would see the overall trend in price, and anyway, I just don't feel like it'd be a very effective strategy. All the regulation and the Czar's Office (haha) would not be needed. And hey, thanks! I like discussing with people to arrive at new conclusions together. I know it can get a bit heated at times, but no harm meant (:
Whoops, I think I took exception to an argument you weren't even making...
I agree with your points about the inhibition of price fluctuation. The system you describe would control short-term consumer-level changes more effectively than they are today. I then assumed that you were also stating that this system would provide the lowest overall prices for consumers, which I disagree with. It was this notion my arguments were directed towards.
With these controls in place, I feel that consumers would gain a sense of false confidence in the "real" price they are now paying for goods. With all oversight concentrated on the sales-side, it would be simple for this reality to be distorted over time.
Also: sadly, I didn't generate that title spontaneously. Last I read, there were seventeen plus official czars in the Bush-Obama continuum, overseeing everything from car safety & student loans to tobacco & terrorism. If something like this was put into place, it wouldn't take long for the bureaucracy to take on a life of its' own. I'd bet it exceeds equilibrium before industry even finishes adjusting to the new model. =/
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On December 28 2013 14:58 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:53 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:39 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote:
Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches. Yeah no worries; this is a blog, not a policy proposal =D So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance. This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system. Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach. See, I don't think that the manufacturers controlling the price would be that big of an issue personally. Let's assume the good was sold to retailers for $100 each, and now the next month it will be sold for $150 dollars each. Now the nice thing here is that even if the price now rose $50, at least the price everywhere will be more-or-less $50 more. So it doesn't really matter where you go buy it, the good will cost the same anywhere, However, I don't believe the fluctuations would be very sharp because: 1) Menu Cost would discourage manufacturers to do this. 2) Companies have stock in the warehouse that they can still expend. 3) Retailers would not respond to price change instantaneously. So I think if a cycle of one price a month is set (this number can be altered or there can be 3 different numbers for different types of companies)... A manufacturer changing the price would not see the price respond super drastically, and the consumers would see the overall trend in price, and anyway, I just don't feel like it'd be a very effective strategy. All the regulation and the Czar's Office (haha) would not be needed. And hey, thanks! I like discussing with people to arrive at new conclusions together. I know it can get a bit heated at times, but no harm meant (: Whoops, I think I took exception to an argument you weren't even making... I agree with your points about the inhibition of price fluctuation. The system you describe would control short-term consumer-level changes more effectively than they are today. I then assumed that you were also stating that this system would provide the lowest overall prices for consumers, which I disagree with. It was this notion my arguments were directed towards. With these controls in place, I feel that consumers would gain a sense of false confidence in the "real" price they are now paying for goods. With all oversight concentrated on the sales-side, it would be simple for this reality to be distorted over time. Also: sadly, I didn't generate that title spontaneously. Last I read, there were seventeen plus official czars in the Bush-Obama continuum, overseeing everything from car safety & student loans to tobacco & terrorism. If something like this was put into place, it wouldn't take long for the bureaucracy to take on a life of its' own. I'd bet it exceeds equilibrium before industry even finishes adjusting to the new model. =/
I am making both arguments actually.
I believe (as does every economics textbook that discusses that I've read) that: The more stability there is in a market, the lower the rate of returns will be. If someone sees a safe industry, they will enter it and drive the profits down in the long-run. Constant prices create stable markets, and stable markets lower prices. That's why I believe that stable prices = long-term lower prices... This might not have been something I stated, just a fundamental assumption I guess.
The reason is... When there are two firms and the prices constantly change to who has the better price, you'll just pick whichever one and go to it. However when the prices are constant and one therefore one firm has a lower price than the other the consumer will rather go to the cheaper one. This will put pressure on the higher price firm to lower price. This cycle will drive down prices and will occur until the price either goes low enough that one of the firms can't compete or it'd lose money, or two, they'd have very similar costs with slight deviations in product/service, and so customers would be split between where they went. This is what happens in most markets. For example Apple vs Android. Android has definitely driven the price of Apple down, and there is pressure on Apple to either make new innovations or lower prices, some people will still remaing with Apple, but Samsung is increasing its market share. Anyway, I think you get the idea.
So to summarize: Illegalizing sales will create less fluctuations in pricing, which will be easier for consumers to handle, which thereby will lower retailing profit, and lower cost of goods for consumers.
I suppose above is exactly what my argument is. There is a lot and a lot of back-up needed to back-up this claim, and not to mention the necessity to consider every counter-example people will come up with.
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On December 28 2013 14:58 vthree wrote:
Well, if you get ban sales, might as well ban advertising and marketing, keywords etc as well since they also effect consumer behaviour that you mentioned in your premise.
I think that some forms of advertising should not be allowed, and that's for another topic, however I don't think currently this is feasible. The resources required for such a project don't outweigh the benefits received. I wont go into detailed explanation of why and provide references and verified readings... I just think it's a lot more manageable and realistic to remove sales before trying to approach aspects of advertising.
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EPT
