Control of immigration
Mon, 29 Oct 2001 14:04:57 -0800
> Kragen said:
> > The larger the market you have access to, the better off you are ---
> > the more people have to compete to get your business. You have more
> > power with a larger market.
> is exactly backwards. Unless you are a monopoly, the larger the market
> you have access to the more you have to compete to get the business of
> your customers, not vice-versa, because if you do not, someone else
> will move their prices closer to cost than yours are, and you will
> lose business.
To be fair to Kragen, I think this is a little misleading. I wouldn't say
it's backwards, because if you reverse Kragen's original statement, you'd
have to show that getting access to a larger market makes you worse off. I
wish we had access to a larger market right now, and I'm not in a company
with a monopoly. I am however in a company with a differentiated product.
Kragen is certainly right in some cases; imagine a Canadian company unable
to sell its high-quality luxury boats in US due to trade restrictions. When
the restriction is lifted, suddenly the Canadian company has access to a
much larger market. Assuming the manufacturer can compete in the US market,
the Canadian manufacturer may actually be able to do some price
discrimination and charge more money to some people. For example their
"American version" (shows knots and miles, not kilometers) may come with a
larger price tag, because American pleasure boaters have more money and are
willing to spend more. So:
(a) the canadian pleasure boats aren't forced to lower their prices because
their product is differentiated from the american product, because people
choose pleasure boats for a number of reasons besides price, and:
(b) the canadian manufacturer may even be able to sell at least some of
their boats for higher than they could before.
It's clear you know what you're talking about Clay, because you exactly
state what will happen in commodity markets where there is no
> The largest markets of all get their own name, commodity markets. In a
> commodity market, the number of buyers and sellers is so large (milk
> is the canonical example) that the market sets the cost -- no movement
> of the price is possible, either up or down, by buyers or sellers,
> without collusion or other external force.
It's just when there is product differentiation where things get more