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  1. #1
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    Reefs, Prices, Economy

    Continuing from:

    http://aquariacanada.com/forums/show...0&pagenumber=4


    Originally posted by nickb
    I think you putting too much weight on a simplistic linear supply-demnad model and systems in equilibrium. The Beta/VHS situation is the classic example of a market which doesn't follow these principles. About 15 years ago, both of these technologies had about 50% of the VCR market and were technically similar (Beta was acutally a bit better technologically). Classic ecnomic theory predicts that they should continue to have a 50% share. Instead, VHS nearly wiped Beta off the market within 5-10 years. The reason was because the real world was non-linear. People perceived that there were more videos available for VHS than for Beta. This meant more people bought VHS which led to more videos which led to..... A positive feedback loop.

    My comments about environmental costs are not future costs. My point was that industry should have to pay NOW for the costs of repairing damaged land, etc. in order to prevent erosion and so on. These are current costs. To stick with your lineae model, these would have the effect of shifting the supply curve upwards which would drive the equiilbrium price upwards. Also, If you look at Figure 3 in the 'gmu' reference, if production costs go high enough (the supply curve shifts far enough upwards), there will come a time when no equilbrium price will exist because the lines will only intersect as a negative number.

    My point about advertising was not to consider it as a cost. Rather, advertising is used to change the demand curve, again producing non-linear and non-equilbirium situations. Think about the market for 'fads' as an example.

    Supply and Demand explains that perfectly though. The perception that VHS was better than BETA caused the demand curve to shift. There may not be a good technical reason to want VHS more, but the theory doesn't care. All it cares about is that people wanted VHS more. Economics doesn't impose what people should or should not buy. I don't think that we can say that Economics theories failed to explain the downfall of BETA. It doesn't try to. Hopefully, you haven't placed too much expectation on what the theory explains. I haven't heard of any Economic theory yet that says a certain product should have a certain market share. Maybe that's a business theory? I also don't understand what non-linear functions mean in Economic terms. Is it a popular opposing view?

    Yes, you can add environment costs to the market's operating cost to raise the supply curve up to increase price. But, it just doesn't happen. Businesses just don't do that. At what level do you add these costs? At the fisherman's, wholesale, or retail level? That's equivalent of a business saying "well, let's spend some money to clean up the environment because that should be part of our costs.". The increased cost of the good would also put fisherman out of work as consumers would stop buying them.

    Demand curves are seldomly constant-sloped and they end at the Y axis or approach 0 as price goes to infinity. Text books only use constant sloped functions for basic demonstrations. Basically, if a product is priced outrageously such as $1 trillion, it is a given that the quantity demanded will be 0 or close to it.

    I'm not sure that it is reasonable to add environmental costs to shift up the supply curve as the solution. The way I see it is that we shouldn't try to shift the supply curve of wild corals up, but rather shift the supply curve of aquacultured corals down. This is done by investing money into technological advances in propagation and retraining fisherman to become coral farmers. The mass production of aquacultured products will make it cheaper to produce and consumers to buy. Education and advertising as well will help move the Demand curve and prices up as you say. I think this is already happening. Looking back now, I haven't been convinced that selling frags to the highest bidder in auctions affects the wildstock.

  2. #2
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    IMO bata failed because it was SONY captive and WAY to expensive. This meant that others HAD to come up with something different and they did so at much better selling prices.
    Rob

  3. #3
    Moderator cres's Avatar
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    Beta and VHS are better compared to Apple and IBM.

    IBM shared its design and there were many 3rd party clone versions available.

    VHS became the shared version with no licensing fees. Many manufacturers produced their own equipment.

    IBM and VHS became the standards.

    I agree that cultured coral and lifestock should be the preferred source for home hobbyists. And, the fact of the matter is that more and more are becoming available. Without having to block or tarrif or otherwise penalize wild captured supply lines, we aquarists can choose cultured supplies when available and send the message that we prefer this supply.
    Sarchasm: The gulf between the author of sarcastic wit and the person who doesn't get it.

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