Re: International Pricing Policy

"Wayne Niddery [TeamB]" wrote:
I.P. Nichols wrote:

You mock me, but it is a bedrock principle of economics: Price is
driven by supply and demand. Costs have nothing to do with price.

The problem with your statement is, "Costs have nothing to do with
price" which is absurd. As my authority I cite George Stigler who won
a Nobel Prize for Economics and authored the seminal text, "The
Theory of Price".

Not absurd at all, *Demand* (lack of it) can push the price *below* cost. That right there shows there is no connection. Of course if that happens, in most cases, one will stop producing that good.

Hmm, right away one begins to suspect there is some sort a relationship between Supply and Cost. :)

To put it another way, whatever it costs to produce your product has no bearing on whether or how much potential customers are willing to pay for it.

If one talks about generalized bedrock economic principles then one needs to consider not just the individual firm in isolation but the aggregate of all firms that comprise the market.

If Stigler disagrees with that, you'll have to quote or link the pertinent passages.

Or better yet as I suggested to Nick, you get a copy of his book and I'll cite the pertinent passages because I'm not about to start transcribing long passages or even whole chapters.

In the meantime do you wish to argue that the cost of crude oil has nothing to do with price of gasoline? :)




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