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Comment by BobbyTables2 | Hacker News Reader

If only McDonalds charges $20 for a burger instead of $10, people will go elsewhere.

If everyone charges $20 for a burger, people will still go to McDonalds. In such a state, no individual place would dare charge $10 again. Why cut revenue to nearly half? It’s not like they have the capacity to sell 20x the usual volume…

I’m not convinced that basic economics works when output capacity isn’t fully scalable.

Same reason no lawn care team tries to deeply undercut competitors - they can only mow so many! (Barring that they hire more helpers)

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> Why cut revenue to nearly half?

Because, to quote Jeff Bezos, your margin is my opportunity. And did he ever squeeze every drop from that opportunity. Just ask the brick and mortar stores in your street.

> I’m not convinced that basic economics works when output capacity isn’t fully scalable.

Economics works for land, which isn't scalable.

> Same reason no lawn care team tries to deeply undercut competitors

That works right up until Fred down the road loses his job, and then it dawns he could be making more money with his mower because of those sweet fat margins those other lawn care people thought they could keep all to themselves.

> Because, to quote Jeff Bezos, your margin is my opportunity. And did he ever squeeze every drop from that opportunity. Just ask the brick and mortar stores in your street.

Sure and now after having become the Shoggoth monopoly, Amazon is now increasing fees. Squeeze your competitors out via unlimited money and then begin to squeeze your customers after you become of the lone poles in the forest.

What part of "Amazon's margin is a competitors opportunity" aren't you groking?

The one where being the dominant player and executing anti-competitive practices removes any opportunity. Being a sufficiently big bullying tree chokes out all future undergrowth for others

That’s an uncompetitive market. No one can outcompete on service, so they can only compete on price, but why would you in such a circumstance, it would only hurt you, so nobody does.

This is what people seem to forget... you don’t need monopolies or collusion for markets to be uncompetitive. Collusion works fundamentally because participants aren't competing with each other... not for the fact people made a secret agreement. It is entirely possible for markets to be completely uncompetitive even without a monopoly or any collusion going on.

Your examples here are better known amongst economists as the Bertrand–Edgeworth model (https://en.wikipedia.org/wiki/Bertrand%E2%80%93Edgeworth_mod...)

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