posted on Nov, 19 2016 @ 10:25 PM
a reply to: Bluntone22
Hi Blutone22, I think you have presented several valid arguments regarding consumers seeking the lowest price. However, in terms of how corporations
price goods I don't think many folks here are particularly well versed in the maths. Most of us like to proclaim 'bumper sticker' phrases as common
sense evidence but it does not really help in understanding the nuances of how the decisions are made.
Case in point: price optimization and game theory
Linear programming is a technique which became widely used after WW2 in business. Here is the wiki :
. There is a nice little graph on the right which shows what the math is
There are many factors which are taken into account and an import tariff would affect more than merely the cost. As others have stated wages have
stagnated and so the feasible price points for various goods have also dropped which lowers the potential for profits.
This is a widely recognized fact and a source of the desire of large corporations to produce outside the US, but the US is also the largest market for
their products and so a healthy consumer population is desirable to these same corporations. The point being these corporations absolutely require a
healthy economy somewhere to make profits.
When only looking at consumer buying decisions then game theory (as you have identified) is clearly the best analytical tool. For a moment imagine ten
years down the road with continued wage stagnation what the consumer would view their best interest to be. It certainly would not be to support these
corporations and often in the past involves action against these large corporations which threatens their existence.
Such a large tariff which would likely be unattainable and a smaller percentage would be instituted. From the governments point of view it would
assist in protecting industries fundamental to national security and, if successful in helping the economy, would garner support from the populace.
Corporations would likely give in to pressure in an effort to maintain access to their largest market and it is in their best interest to help ensure
that market stays healthy. So in the long run if a tariff assists in restoring the health of the largest market then it would be in both the best
interest of the corporations and the consumers despite the initial pain either side may feel.
The only other solution to this problem is a guaranteed minimum income which sadly still faces strong opposition.