Russian Mafia

Which indicates what, that they don't price according to supply and demand? In Walmart's case supply and demand applies to their overall inventory/items to be sold. A strategy of employing loss leaders to get people in the store doesn't mean they aren't profit maximizing or are sacrificing price on their overall inventory/items to be sold. If you buy a shirt they don't charge you for the buttons. Or do they? A better indicator is whether Walmart is running out of stuff to sell aside from the supply chain interruptions of the day. If they aren't it's an indicator their collective pricing is balanced with S & D.

And to think I'm from a Communist state...

aggie57

Yep, happening in SoCal too, on Toyota's and similar makes.

BIGWORM

I went to see the new buck tooth M3/M4 todays. They dont look as bad in person, but I still couldnt live with that. Especially now that they removed DCT and made it so hideous looking. Anyways, they had 7 M3's (and 4 M4's) sitting on the lot and had 10K dealer markups on them. If demand is SO high, then why are they sitting? Actually.. I know why. Because they are so ugly!

rk-d

Of course on a macro level you are correct. But you can argue there are some exceptions on an individual basis - like Veblen goods.

But then again, I'm not even sure what we're debating here. Porsche sales operate under normal supply/demand forces. Even those cases where people get discounts at below market value - the house always wins. Those cases are typically in the effort to retain high value customers who spend a lot of money.

phaser

Walmart undercuts their competitors prices, not any kind of a secret.
Please don't concern yourself with my business expertise or lack of such. I have enjoyed what many would consider profound successful in business whether my "understanding of basic economics" is in line with yours or not.
Gotta love all the blowholes out there who know everything and are quick to advise and pass their judgments. Most entertaining.

Russian Mafia

If you think undercutting competitors is proof of pricing not based on maximizing based on supply and demand...you simply don't know what you're talking about. And name-calling confirms it.

phaser

Never fails, anytime ADMs are discussed on an internet car forum there is invariably the guy who demonstrates the fact that he made through the 8th grade and enlightens the other forum members on "supply and demand". Who knew?

phaser

So glad to see that you know more about my business affairs than I do, speaks volumes. Hilarious.

Russian Mafia

​​​​​​I didn't give any advice. Kudos as to your business success.

Nibiru12

Walmart pricing is precisely what Adam Smith called the "natural price", not due to supply and demand, sort of minimum price that the supplier, manufacturer, or any seller would charge.

It is good for consumer and makes manufacture to work harder and innovate.

Supply and demand is a temporary, short term phenomenon.

In an industrialized society with free market competition, supply of manufactured goods can and will always fulfill or exceed demand in a reasonable long term.

phaser

Impressive.
Good to know.

Russian Mafia

Natural price is effectively the long term intersection of S&D. It's still based on S&D. Whereas Smith defines market price as spot market pricing based on S&D at a particular moment. They're both S&D based but on different timeframes. Tough discussing economics on the internet.

Nibiru12

Well, minimum price is set by the manufacturer alone, when there are more supply than demand....

It's like "I'd rather idle or do something else than continue to sell my things at a loss below that (minimum) price"

For a short term, sellers can sell at a loss and leave the market, and less demand can mean further reduction in price, temporarily.

But for the long term, sellers will not continue to sell at a loss, they will stop producing or leave the business, so the price will not move below certain minimum price, for the long term.

It is kind of flat portion of the "graph" modern economists forgot about... and it is independent of demand.

phaser

Academia to the rescue!
This thread is reminding me of Rodney's first college business class.

Jeff4598

You are thinking about it as if Porsche was a company that makes money by selling sports cars. They are a company that makes money selling SUVs that go for far more because people think thewr sports cars are lust worthy. Selling a few less 911s to make them even more desirable will sell more SUV's and the dealers get a bonus profit on every 911/boxster/cayman so everyone (other than us) is thrilled. The Rolex model if you will. They have vaults full of Daytonas they trickle out boosting the desirbility of every watch they sell.