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Comment by dangerboysteve | Hacker News Reader

so, in other words, a 5% tax to the consumer.

Companies charge as much as they can, not how much it costs to produce plus fixed overhead.

They likely already charge what the market will bear, to maximizing revenue, such that increasing the price lowers revenue. Raising the price by 5% as a straight pass-through means lowering total revenue. Depending on the elasticity, the consumer price change could be 0 (assuming no one will pay for a higher price), but is almost certainly less than 5%.

Yes, in a competitive market, but when the entire industry is hit with a new exogenous expense then this is much more likely to be passed on to customers.

> Companies charge as much as they can, not how much it costs to produce plus fixed overhead.

Companies will sometimes overtly pass a cost on to the consumer in the hopes of creating political pressure against that cost. For example take a look at your phone or cable bill and how they itemize every tax and fee they have to pay and pass along to you.

And have those itemized breakdowns resulted in political pressure to change things?

If one of those taxes were removed, do you think the overall cable bill would actually go down, and stay down?

This is a myth. Pricing is not deterministic like that. There are many reasons that a company may choose not to raise prices when it's costs go up.

Plus they're going to raise the price whenever they think they can get away with it anyway.

This is closer to the real answer. The price is what the buyer is willing to pay.

the price the buyer is willing to pay is whatever is cheaper than the effort of piracy.

I’d like to see a solid, peer reviewed study that states: in a normal, competitive market, business cost increases are not correlated with consumer price increases.

I mean, obviously they're going to be related. Even in a perfectly competitive environment, if everyone's costs increase then so will the going price. The operative question is whether these increased costs will be passed onto the consumer in their entirety, and that much isn't necessarily clear. If they do pass those costs on 100%, then it's a tacit admission that they weren't pricing in a profit-maximizing way before the cost increase.

Just Google 'price elasticity' for one well known case where there is not necessarily a linear relationship.

When a similar (though lower) streaming levy was implemented in France, Spotify passed it onto consumers.

Yes, a myth

Just like VAT increases are not quickly followed by price increases

A myth.

Lol. No clue what you're talking about eh? VAT is not paid by businesses. It is paid directly by the consumer.

Here in France, VAT is a tax collected by the business.

The myth is that a VAT increase (for instance, 7% => 10%, a couple of years ago) would shrink the business' margins : for 100€ paid by the customer, 93€ used to go to the business before the change, and only 90€ would go after the change.

Of course, and this is a massive surprise, all prices increased : the product now costs 110€, with 99€ going to the business and 11€ as VAT

So yeah, I'm pretty sure I know how my taxes work. That said, I can only speak about here in France, as I do not know how it works in other countries.

This isn't a tax, it's a requirement that 5% must be spent on Canadian content. So unless they aren't already spending at least 5% on content then it might affect the mix of content they have available but it shouldn't affect their costs.

In that case, they just need to create a Canadian company and create AI-generated programs...

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