| > No, they will lower prices and keep margins constant. This prevents competitors from moving in. I'm not sure what to say about this other than, no, they won't. If you're a publicly traded company, your investors want profit margins to go up, not stay the same. Unless you can convince them otherwise because you're growing -- but even then, they still want your profit margins to eventually rise. If you go into a business thinking "I want to make $X, and I'll lower my prices until I hit that target", then you're approaching your business the wrong way. Even in cases where companies are trying to cement a monopoly or drive competitors out of business, they still don't make their pricing decisions based on the cost of material/labor, they make their pricing decisions based on what prices will drive competitors out of business. Companies like Uber famously lose money on many of their services because they're trying to cement monopoly statuses for those industries. They get VC money and they price based on what they think they need to price. Their decisions are based on what the market looks like, and they're willing to have negative profits in order to hit the prices that they think are necessary. In both cases, no competent business owner is thinking "I only want to hit $X profits this year, and anything over that is going to the consumers as a gift so that they'll like me." > Similarly, increased benefits from collective bargaining will result in higher prices for amazon goods and services See above, that's not how markets work. You don't charge what a product costs to make, you charge what the market will bear. Literally the first thing you should learn in an economics class. Products cost what people will pay for them. This is (arguably) the entire cornerstone of free market Capitalism -- the idea that the value of a set of inputs into a business is not necessarily the same as the value of its outputs. One of the big points of Capitalism is that products get priced based on what people are willing to pay, not based on what they cost to produce or based on some kind of predetermined formula. If you have to pay your workers more, tough luck. Under Capitalism, your products are still only worth what the market is offering. > and more automation As opposed to right now, where Amazon isn't trying to automate any part of its warehousing or delivery process? And in any case, automation is good. We want to eliminate bad jobs. And even among automation-critics who worry about lost jobs and the cost of retraining, their goal in opposing automation is not to make those jobs periodically worse and worse to try and keep pace with the price of machines. |
No, they want their return to go up. They don’t care about the margin, they care about the total yield (growth + dividend).
> Unless you can convince them otherwise because you're growing -- but even then, they still want your profit margins to eventually rise.
No, you want your net profit to rise. You want your margin to be low because then its harder for others to compete with you.
> If you go into a business thinking "I want to make $X, and I'll lower my prices until I hit that target", then you're approaching your business the wrong way.
This is true.
> Even in cases where companies are trying to cement a monopoly or drive competitors out of business, they still don't make their pricing decisions based on the cost of material, they make their pricing decisions based on what prices will drive competitors out of business. Companies like Uber famously lose money on many of their services because they're trying to cement monopoly statuses for those industries. They get VC money and they price based on what they think they need to price. Their decisions are based on what the market looks like, and they're willing to have negative profits in order to hit the prices that they think are necessary.
Glad you agree that companies are optimizing for their place in the market and not naively optimizing for a large profit margin.
> See above, that's not how markets work. You don't charge what a product costs to make, you charge what the market will bear. Literally the first thing you should learn in an economics class. Products cost what people will pay for them.
This is true and still misses the point that an increase in the cost of inputs results in an increase in costs, resulting in an increase in price.
> As opposed to right now, where Amazon isn't trying to automate any part of its warehousing or delivery process?
> more
> opposed
I think its well understood among people who are familiar with unions that increasing labor costs results in acceleration of an automation process that is already in progress.