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Car makers like Jaguar Land Rover and Peugeot have been accused of using special software to raise spare parts prices.
Source: https://www.engadget.com/2018/06/04/car-makers-used-software-to-raise-spare-parts-prices/
Ever had the nagging suspicion that your car's manufacturer was charging outrageous prices for parts simply because it could? Software might be to blame. Reuters has obtained documents from a lawsuit indicating that Jaguar Land Rover, Peugeot, Renault and other automakers have been using Accenture software (Partneo) that recommended price increases for spare parts based on "perceived value." If a brand badge or other component looked expensive, Partneo would suggest raising the price up to a level that drivers would still be willing to pay. It would even distinguish parts based on whether or not there was "pricing supervision" over certain parts (say, from insurance companies or focused publications) to avoid sparking an outcry.
(Score: 5, Informative) by Thexalon on Tuesday June 05 2018, @05:11PM (9 children)
That's definitely not the only market inefficiency that can occur under capitalism. Here's an example:
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Consider a widget that requires a great deal of capital to produce. There's no red tape or anything, since this is absolute capitalism, but there's just a ton of stuff you need to make a minimum viable product (a railroad line, a high-tech bit of hardware that requires complex equipment to manufacture, etc). Now, there isn't a monopoly, but there are just 3 firms that have the necessary capital. Now, the CEO of each of those 3 firms, tasked with making more money, has three ways to do it:
1. They can make a better widget, which is good for the real economy because better widgets are now available.
2. They can cut their prices to try to gain market share, which is good for the real economy because now it's easier to get those oh-so-handy widgets.
3. They can raise their prices in the hopes that the other 2 firms will raise their prices in response, creating a tacit agreement that all 3 firms will overcharge for widgets and thus all make more money selling widgets. This is bad for the real economy, because it means widgets cost more than they really should based on the cost to produce said widgets.
Of those, option 3 is by far the easiest one to engage in. But, you cry, what prevents that is another competitor entering the marketplace. But the new competitor isn't going to be able to easily enter, because the step of acquiring the capital is often insurmountable. And once they do, they have no real incentive to not overcharge for widgets themselves. Plus mergers and acquisitions often prevent that new competitor from staying independent for long - remember, all 3 of the established players have a strong incentive to remove the upstart from the market.
And that describes a very large number of markets in existence today in capitalist countries.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Insightful) by The Mighty Buzzard on Tuesday June 05 2018, @06:07PM (5 children)
Nah, startup capital isn't a problem. Unless the government is throwing roadblocks in the way or other exclusive deals have been signed, an investment in a third party with solid plans for kicking the shit out of the entrenched parties is easy money and enough investors know it. Either of those conditions is an artificial monopoly stifling competition though.
My rights don't end where your fear begins.
(Score: 5, Insightful) by Thexalon on Tuesday June 05 2018, @07:32PM (4 children)
... says somebody who I'm reasonably certain has never tried to acquire startup capital. I mean, have you ever walked into the offices of, say, Goldman Sachs, and said "I have a great idea for a business, can I have $100 billion?" Yeah, I didn't think so.
And here's the biggest barrier to getting the startup capital you completely left out of your considerations: Your most likely sources of startup capital are going to have to be very rich, because this is a business with a high capital cost. Said sources are quite likely to be invested in one of the 3 players in this oligopoly. That investment means that they want the gravy train to continue unabated, because they're getting some of that gravy.
If you want empirical evidence that oligopolies are inefficient, just look at the shareholder reports of players in the major oligopolies today. If all market players are reporting high profit margins then the market is inefficient, because those high profits come from charging a lot more for the product in question than it costs to produce it. Or you can examine markets where the price of a product has increased substantially without any significant increase in the costs of production.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2, Funny) by Anonymous Coward on Tuesday June 05 2018, @07:41PM
You are asking for WAY too much critical thinking.
(Score: 0) by Anonymous Coward on Tuesday June 05 2018, @11:31PM (1 child)
That's not how it works. How much capital were youtube or github blowing through before acquisition? How much is twitter blowing through now and what exactly is twitters business model?
(Score: 2) by Thexalon on Wednesday June 06 2018, @01:38PM
All your examples are relatively low-capital businesses, where they could and did release their product to the market after spending a few million at most. Modern examples of the businesses I'm talking about are much more complex than that, like designing and manufacturing microchips or nationwide cell phone coverage.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0) by Anonymous Coward on Wednesday June 06 2018, @12:56AM
Google had no problem raising capital to go against microsoft when it owned 90% of the browser market and people were talking abut having to get the government to step in and fix the situation.
(Score: 3, Interesting) by frojack on Tuesday June 05 2018, @09:35PM (1 child)
Or, say with a Car Analogy, (remember where we started?)...
The current manufacturer of that particular car still holds a bunch of patents, and it ties into their on-board computer system which tries to protect patents when parts are added.
You've got a warehouse full of parts, and you have to maximize profit. You take the best course of action on each part.
Part fits multiple model years? Price remains high. Part has several third party competitors, price stays low.
I suggest the Accenture software probably reduces prices on over stocked items, as well as those that can be obtained from multiple sources. But we won't hear about that on SN. Only price rises.
No, you are mistaken. I've always had this sig.
(Score: 2) by sjames on Friday June 08 2018, @12:40AM
That's because a competitive market is what is supposed to be happening. The fact that it's increasingly not the case is a problem that needs to be addressed.
"Man walks past bank, doesn't rob it" isn't news.
(Score: 2) by JoeMerchant on Wednesday June 06 2018, @03:18AM
🌻🌻 [google.com]