Am Dienstag, den 04.03.2008, 14:12 -0800 schrieb William Ahern:
> Many economists will tell you that there's no such thing as dumping. It's a
> myth--or more generously, a misunderstanding--about how free markets work.
Many other economists will tell you that's ideological drivel.
Ideally, in a free market, everybody charges the minimum price needed to
provide some goods or services, optimally allocating resources in the
process.
When dumping, a vendor sells for less than that price.
Even in an ideal market, this would lead to nonoptimal resource
allocation. Other than that, the vendor would soon go out of business,
leaving the market to competitors, so there would be no long-term
problems (though that may be ignoring relevant short-term effect - but
that's yet another can of worms).
In a real market, it's a ploy on market entry barriers. By undercutting
all reasonable prices, competitors give up on that market, so the
dumping vendor remains the last on his market. After that, he can raise
the prices above the true market price, as long as he keeps it low
enough that the usual market entry barriers keep new competition from
arriving.
So the practice of dumping is an exploitation of one situation where
real markets diverge from the theoretic ideals. At the end of such a
dumping maneuver, the market is even father from the ideal.
(That's the reason why dumping is considered illegal. Not because giving
gifts is unethical or something, but because it makes markets work less
well. It's the same kind of rationale that makes fraud illegal in most
countries.)
> Since I'm an
> optimist, and have this crazy idea that civilization in 2008 is vastly more
> evolved than civiliation circa 1008,
In fact, "fair" pricing for various goods was subject to intense debate
in medieval times. So the issue isn't particularly new, it's just the
economic price relationships that have changed: food, lodging and
transportation have become vastly cheaper, so today, finding a fair
price for food isn't the matter of life and death that it could be in
1008. (And, of course, medieval people didn't have the theory for the
free market. It didn't matter much though, transportation was so
expensive that no real free market existed anyway.)
Regards,
Jo
> Many other economists will tell you that's ideological drivel.
And some scientists will tell you that the earth is 4000 years old.
> Ideally, in a free market, everybody charges the minimum price needed to
> provide some goods or services, optimally allocating resources in the
> process.
Not necessarily. The consumer does not care what the cost of
production is. He only cares about the marginal utility of the product
to him.
> dumping vendor remains the last on his market. After that, he can raise
> the prices above the true market price, as long as he keeps it low
> enough that the usual market entry barriers keep new competition from
> arriving.
In other words, he is able to sell the product for a lower cost than
the competition will be able to. Sounds like a good deal to the
consumer.
> free market. It didn't matter much though, transportation was so
> expensive that no real free market existed anyway.)
A free market is just people voluntarily exchanging goods and
services. Whether this is silk traders from 500BC, oil traders in 2008
or intergalactic gold traders in 3000, they all follow the same
principle - that division of work and specialization enabled by trade
raises productivity and hence wealth.
From: Patrick May
Subject: Re: is free, open source software ethical?
Date:
Message-ID: <m2skz5jhqx.fsf@spe.com>
········@gmail.com writes:
>> Many other economists will tell you that's ideological drivel.
>
> And some scientists will tell you that the earth is 4000 years old.
They might, but they won't be making that statement as
scientists. All the available evidence points to the age of the Earth
being around 4.5 billion years.
> A free market is just people voluntarily exchanging goods and
> services. Whether this is silk traders from 500BC, oil traders in
> 2008 or intergalactic gold traders in 3000, they all follow the same
> principle - that division of work and specialization enabled by
> trade raises productivity and hence wealth.
Now that makes sense.
Regards,
Patrick
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