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Comment by kolinko | Hacker News Reader

Well, don't forget our lovely European regulations. The costs of hiring employees and handling business in Europe is higher than in US if I'm not mistaken.

Finally, I'd guess that Apple pays its contractors in USD. So if today 1 USD = 0.8 EUR, Apple needs to consider the fact that tomorrow it may be 1 USD = 0.9 EUR, and the price needs to reflect this scenario as well (they cannot change the price every single month to reflect the current USD/EUR conversion ratios).

These are details, but add them together, and you'll arrive at that 10% price difference (I guess)

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The european regulations are cheap compared to the legal risks of operating in the states. So, thats not it.

Exchange rate? You keep assuming prices are based on costs. They are not. They are based on profit.

So, when the population in a country has more money to spent, or better but, there where the median, rather than the average, income is the highest, the prices will be too.

So, its cheap in the US because americans are generally more poor, except for a few that throw the average. Off course, "poor" is a very relative concept in this regard.

Income inequality leads to lower prices, and lower margins.

The data don't really seem to support that view of things:

http://en.wikipedia.org/wiki/Median_household_income

>The european regulations are cheap compared to the legal risks of operating in the states.

Cite?

Agreed - it seems once a week or so, someone says this on HN, but I don't see any references to a source.

It presents an odd, and totally unscientific, conundrum: I see people on HN claiming it's very legally risky to do business in the US, and many of the people I work with and socialize with who are in leadership positions here see doing business in the EU as overly regulated and difficult to make a profit at. I suspect both of them have missed the mark. Largely, I suspect that both groups have built their opinions out of news articles or other fractional views - which tend to focus on the most sensational, rather than the most common.

That being said, there are some interesting contrasts to be made, and at least some scholars have indicated a growing convergence between the nature of the two legal systems, at least in some regards.[1]

[1] http://www.law.columbia.edu/center_program/legal_theory/pape...

This is true, price is based on purchasing power. If the public has more money to spend OR IS WILLING TO SPEND MORE then the business will set the price higher.

The european regulations are cheap compared to the legal risks of operating in the states. So, thats not it.

You would need to provide some evidence of this since it is completely counter intuitive. Just look at where US treasuries compared with European bonds to compare which countries/continents are viewed as having less legal risks.

Exchange rate? You keep assuming prices are based on costs. They are not. They are based on profit.

You are correct, if French people will pay more for an Apple product and Apple can price discriminate, they will.

So, when the population in a country has more money to spent, or better but, there where the median, rather than the average, income is the highest, the prices will be too.

Well, median income is not the deciding factor for willingness to pay, but would certainly be a contributing factor. Supply and demand equations could be more complex or less complex depending on the situation.

So, its cheap in the US because americans are generally more poor, except for a few that throw the average. Off course, "poor" is a very relative concept in this regard.

This is untrue, proven by the other person's link to wiki.

Income inequality leads to lower prices, and lower margins.

This is untrue also. The price of gold watches and private jet flights are not affected by income inequality, but rather the size of the target segment (wealthy people). A highly polorized economy with 50% really rich vs 50% really poor would by far more jet rides than a country with a distribution toward the center.

> Just look at where US treasuries compared with European bonds to compare which countries/continents are viewed as having less legal risks.

To be fair, you're comparing apples to oranges. Government bond prices reflect the default risk of the government in question. 'Legal risks' include things like getting sued because of perceived defects of your product. Some statistics about that would be interesting, but probably vary greatly by sector: medical devices probably involve lots of ass-covering, whereas something like paper notebooks probably incur fewer lawsuits.

To be fair, you're comparing apples to oranges. Government bond prices reflect the default risk of the government in question.

They also reflect overall competitiveness of the country in question which by definition includes legal risks. This is primarily driven from currency fluctuations. In Europe, the German Bund is currently priced stronger than Spanish bonds which is due to default risk.

If each country had their own currency (compare US to Europe as a whole), the bigger fear would not be default risk, it would be inflation risk. This inflation risk is a function of competitiveness.

'Legal risks' include things like getting sued because of perceived defects of your product. Some statistics about that would be interesting, but probably vary greatly by sector: medical devices probably involve lots of ass-covering, whereas something like paper notebooks probably incur fewer lawsuits.

I agree with your assessment of what legal risks are, but keep in mind it is more to do with the change in legal structures rather than current legal structure. If there is no change, businesses can make projections and be confident in them. If there is a risk of change, that is perceived as a larger legal risk.

I don't have statistics, but I would say that a country (France) which elects a president that is perceived as socialist (radical change from previous president) has far more legal risks than the relatively stable US.

I think the OP was talking about the costs of lawsuits and their effects on business, not risk of doing business in general in various places.

Also: I don't think that, in the context of France, the change in presidents is really all that radical. I suppose I could be proven wrong, but I don't see them as being that much further apart than, say, GWB and Obama, even if the latter two are shifted 'rightwards' compared to what the center is in France.

Don't forget the EU also levies additional duties on imported black goods.

Well, don't forget our lovely European regulations. The costs of hiring employees and handling business in Europe is higher than in US if I'm not mistaken.

That's a cost I'm willing to take. I don't want sweatshops like China, or CEOs who can threaten all employees with at will firings if they don't give up their stock options (Zynga IIRC). Give me good old fashioned rights any day.

The MacBook was built in a sweatshop in China -- unless your nation has import tariffs, European regulations won't help that. But the price of a MacBook is still higher than in the US.

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