On 12/11/2010 11:43 PM, Martin Brown wrote:
On 12/11/2010 12:14, Sylvia Else wrote:
On 12/11/2010 9:14 PM, wrote:
In sci.skeptic Sylvia wrote:
You're conflating cost, price and value. They're distinct concepts.
Obvioustly. Hence my referce to to part they individually play in
standard supply/demand theory. You either accept that theory or do not.
If you do, then your "deductions" from prices are incorrect.
If you do not, then you admit that prices have little to do with
supply or demand. I.e. prices are even more arbitrary than the
simple thory would have it. If so, then your "deductions" from
prices are more incorrect.
[some economics 101 definitions]
You're just lowering the bar.
The market determines where the price lies between cost and value, but
the price still has to lie between them. If it doesn't then either
sellers are losing money on the sales, or purchasers are paying more
than they believe the thing is worth. Neither scenario is going to occur
in the normal way of things. People sometimes make mistakes, and
sometimes things are sold below cost or bought above value for ulterior
motives, but in the main stream the price cannot lie outside the limits
of cost and value, because people are not that stupid.
They are *exactly* that stupid. I take it that you have never heard of
any of the "Designer" Brandname products that are priced way beyond
their intrinsic value or cost to manufacture. People will pay insane
amounts of money for a trendy "Name" on their clothes, perfume etc.
What you're saying is that people have different notions from you as to
value, and I'm inclined to agree that the values people attach to some
products beggars belief. But people people don't pay above the value
they perceive.
A person may buy a rainwater tank because it makes them feel green (and
they like that feeling). If they do that, then that feeling is what
makes the value higher for them.
But if they're simply trying to obtain their water for the lowest
possible expenditure, which is the situation we're discussing, then the
value is the lowest price they can get, and desalinators will win over
rainwater tanks because it is not possible for rainwater tank makers to
offer a price that competes with desalination. Any price that would
compete would be below the cost.
Sylvia.