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Comment by stale2002 | Hacker News Reader

stale2002

Because of supply and demand and competition.

If companies could squeeze more money out of customers why wouldn't they just do so right now by raising prices?

Because they would all have to collude to not lower prices, which is illegal. Once one lowers prices - which will happen, because doing so will lead to better business immediately - the rest have to follow.

Such is the nature of competition, and one of the basic reasons why it works. Frankly, I'm surprised it still needs to be explained.

Well, if truck driving were automated, they certainly wouldn't lower then.

Personally, I imagine a lot of companies will use that extra money to buy out, take over, or otherwise eliminate their competition. I doubt the consumer will win.

You could have made the same argument about any technology when it was first created. Why didn't that happen?

It has happened; just look at how the computer manufacturers consolidated when off-shore production took the bottom out of that market.

Really, anytime a major player has cash on hand, they're going to buy out competition, either through acquisition or buying an equivalent product. When Oracle had liquid assets, they buy Sun. ATT and Verizon consolidated the cell phone market down to ATT and Verizon (and even attempt to merge down one step further). DeBeers buys every diamond producer on the market.

If transport companies don't lower prices, won't new companies enter the market and undercut the incumbents?

I imagine (some of) the transport companies will lower their prices, it's the McDonalds, Best Buy, Wallmart, and everybody else who has no reason to lower their prices, even though their costs have dropped.

And so long as the cost to get into the industry is high (the up-front cost of a driver is effectively 0, whereas AI will be non-0), and the incumbents have the ability to drop their prices lower than any new startup (thanks to the efficiencies of scale), serious new competition will be rare.

Even considering all that, the cost for shipping something is remarkably low to begin with. $400 for an 40' shipping container worth of goods over 300 miles? Drop the driver from the equation entirely, and that cost would only go down by about $100. As a point of reference, a 40' shipping container full of bananas is worth in excess of $58,000 (1000 boxes per container, 100 bananas per box, $0.58 per banana).

Because they have far greater leverage over labor markets than they do over the market for their product. You don't have to raise prices in a fickle consumer market when you can just make your profits off the much less elastic labor market instead.

They only have to keep prices the same or negligibly lower in order to profit from this proposal.

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