Yeah, I guess “perfect” and “imperfect” are probably not how I should talk about this lol
By “imperfect competition” I just meant that the lowest production cost doesn’t always win among similar products, due to factors like
transport costs — either moving product to consumer, or consumer to product — which can give companies a local pricing advantage over more distant competition
consumer inability to compare products in a consistent way — whether comparing use-values of products at a given price, or comparing prices at a given use-value
marketing, branding, packaging, and other appeals to consumer psychology
Profits comes from firms picking the right combinations at the right time from these options: Lower costs, technical development, undercutting, patent hoarding, scalability, and government patronage but lower costs is typically the primary, go-to solution
So everyone’s racing to automate, exploit, and cut corners ahead of the others. What happens when they run out of room? Do they just start buying each other?
By “imperfect competition” I just meant that the lowest production cost doesn’t always win among similar products, due to factors like
True, it’s not always the path to success, but it typically is and that’s what matters on the macro scale across sectors and national economies
transport costs — either moving product to consumer, or consumer to product — which can give companies a local pricing advantage over more distant competition
That still falls under the overarching cost structure that firms need to lower
consumer inability to compare products in a consistent way — whether comparing use values of products at a given price, or comparing prices at a given use value
That forms part of the bedrock of the turbulent regulation of demand, that capitalists are constantly overshooting or undershooting as they try to continually adjust
marketing, branding, packaging, and other appeals to consumer psychology
Attempts at scalability that may or may not work, an attempt by firms to regulate demand as it’s regulating them, leads right back to the overshooting and undershooting problem which has enormous implications for future investments, or more importantly the potential lack thereof
So everyone’s racing to automate, exploit, and cut corners ahead of the others. What happens when they run out of room? Do they just start buying each other?
Capitalists stop investing, begin layoffs and a depression ensues, no room for profits and growth means no investments
By the way, I always worry that I seem argumentative when I ask a lot of questions, but to be clear, that’s not the intent! I’m just laying out my current mental picture so people can see where it’s wrong and help me update it. I had some existing notions in my head, but they didn’t all seem to add up.
That still falls under the overarching cost structure that firms need to lower
of course, but it’ll always cost something, right? Which means that, if you have a region in which you’re the only supplier, and your competitors are outside that region, everyone in your region basically has to pay a transport tariff if they want to buy from your competitors. That “tariff” gives you more wiggle room to charge above cost.
I don’t know how important this is though. I assume it matters for unprocessed raw goods, like minerals or crops, where everyone’s product is basically identical, and production is often constrained to certain locations where mines or farms can be developed. I assume it also matters somewhat for brick and mortar stores — a consumer isn’t going to drive to the next town just to pay slightly less for bread. But I don’t know how big a chunk of profit can be blamed on this. Is it more of a footnote or is it a big deal?
Capitalists stop investing, begin layoffs and a depression ensues, no room for profits and growth means no investments
By the way, I always worry that I seem argumentative when I ask a lot of questions, but to be clear, that’s not the intent! I’m just laying out my current mental picture so people can see where it’s wrong and help me update it. I had some existing notions in my head, but they didn’t all seem to add up.
No worries, I didn’t take it that way, I’m more than happy to answer questions and help comrades flesh out their understanding
That “tariff” gives you more wiggle room to charge above cost.
That’s the thing, it’s not above cost, it is simply the cost, production and transport are under the same cost structure, got to pay to make it and pay to move it, wages, material and energy are the main costs. In competition-as-war an army with an advantageous position is fair policy
It’s not a guarantee of victory, but it’s certainly not a war crime, profitability is defined by what you can get away with
I assume it also matters somewhat for brick and mortar stores — a consumer isn’t going to drive to the next town just to pay slightly less for bread. But I don’t know how big a chunk of profit can be blamed on this. Is it more of a footnote or is it a big deal?
“location, location, location” is a saying in business for a reason, again it’s not a guarantee for success, firms that have overwhelming technical development, enormous scale or juicy patents can still overwhelm your location advantage and kick you out of the leading regulator game, but it depends on the sector and frankly energy costs in the wider economy
Yeah, I guess “perfect” and “imperfect” are probably not how I should talk about this lol
By “imperfect competition” I just meant that the lowest production cost doesn’t always win among similar products, due to factors like
So everyone’s racing to automate, exploit, and cut corners ahead of the others. What happens when they run out of room? Do they just start buying each other?
True, it’s not always the path to success, but it typically is and that’s what matters on the macro scale across sectors and national economies
That still falls under the overarching cost structure that firms need to lower
That forms part of the bedrock of the turbulent regulation of demand, that capitalists are constantly overshooting or undershooting as they try to continually adjust
Attempts at scalability that may or may not work, an attempt by firms to regulate demand as it’s regulating them, leads right back to the overshooting and undershooting problem which has enormous implications for future investments, or more importantly the potential lack thereof
Capitalists stop investing, begin layoffs and a depression ensues, no room for profits and growth means no investments
By the way, I always worry that I seem argumentative when I ask a lot of questions, but to be clear, that’s not the intent! I’m just laying out my current mental picture so people can see where it’s wrong and help me update it. I had some existing notions in my head, but they didn’t all seem to add up.
of course, but it’ll always cost something, right? Which means that, if you have a region in which you’re the only supplier, and your competitors are outside that region, everyone in your region basically has to pay a transport tariff if they want to buy from your competitors. That “tariff” gives you more wiggle room to charge above cost.
I don’t know how important this is though. I assume it matters for unprocessed raw goods, like minerals or crops, where everyone’s product is basically identical, and production is often constrained to certain locations where mines or farms can be developed. I assume it also matters somewhat for brick and mortar stores — a consumer isn’t going to drive to the next town just to pay slightly less for bread. But I don’t know how big a chunk of profit can be blamed on this. Is it more of a footnote or is it a big deal?
Ahh okay that makes sense.
No worries, I didn’t take it that way, I’m more than happy to answer questions and help comrades flesh out their understanding
That’s the thing, it’s not above cost, it is simply the cost, production and transport are under the same cost structure, got to pay to make it and pay to move it, wages, material and energy are the main costs. In competition-as-war an army with an advantageous position is fair policy
It’s not a guarantee of victory, but it’s certainly not a war crime, profitability is defined by what you can get away with
“location, location, location” is a saying in business for a reason, again it’s not a guarantee for success, firms that have overwhelming technical development, enormous scale or juicy patents can still overwhelm your location advantage and kick you out of the leading regulator game, but it depends on the sector and frankly energy costs in the wider economy