[sandorski]

Couple factors:

1) the mentioned "Greed". More accurate to call it a Profit Grab.
2) somethings were bought at the Higher Price and are still in Inventory. Thus lowering the Price is discouraged to avoid cutting into Profits.

Most likely 1.I think 2 needs to be considered before complaining too much though. Prices can't just fluctuate daily based upon the value of the $CDN.

[andyt]

See, if I understand Leemy, what the supplier paid for it is irrelevant, since it's demand that sets the price.

There are a lot of other factors involved. Economies of scale. More competition in the US because the larger market allows more players. Transportation costs. Regulations. And because we're used to paying higher prices - ie our demand doesn't drop so much at a higher price as it would in the US.

[andyt]

I think greed is a really stupid answer to this question. I mean, you guys that said it, do you really think Canadian retailers are greedy but US retailers are in it because of love for their fellow man? Thimk about it.

Self-interest drives the whole system. The owner wants to make as much profit as he can. The employees want to earn as much money as they can. And the consumer wants to pay as little as possible. I mean that's why it worked to send production to China, consumers were happy to pay less, they didn't say "I'm going to pay more so I can buy the same product but made in Canada." They even bought the cheaper product even tho the quality was less too. So greed is driving all of us in this.

[andyt]

Lemmy, here I go again: if price has nothing to do with the cost of labor, why did all our manufacturers relocate to China. It didn't all go into their hands as profit, they were also able to reduce prices. Worked till they all did it, now they probably have the same profit margin as before, just with a bunch of Canadians losing good jobs and having to work at Timmies.

[Lemmy]

andyt andyt:

I think greed is a really stupid answer to this question. I mean, you guys that said it, do you really think Canadian retailers are greedy but US retailers are in it because of love for their fellow man? Thimk about it.

It's not so much that Canadian retailers are greedier, but they have, historically, had SIGNIFICANTLY greater market power than their American counterparts. Canada's level of competition is much lower, though NAFTA and globalization have made significant inroads to improving competition. Still, though competition can be a good thing, it also has negative implications, specifically with quality-demand (ie. cheap Chinese, low-quality imports). But for those of us over 35, we're so used to the "way it's always been" that we passively accept the collusive and regulatory demands of our domestic retailers and producers and this passivity is a major reason we pay higher prices.

andyt andyt:

Self-interest drives the whole system. The owner wants to make as much profit as he can. The employees want to earn as much money as they can. And the consumer wants to pay as little as possible. I mean that's why it worked to send production to China, consumers were happy to pay less, they didn't say "I'm going to pay more so I can buy the same product but made in Canada." They even bought the cheaper product even tho the quality was less too. So greed is driving all of us in this.

True. But that trend should reverse. I'm hopeful that consumers are becoming wiser and fussier about quality. But it's hard psychology to overcome, convincing peopel it's in their best interests to choose higher-priced alternatives.

andy andy:

Lemmy, here I go again: if price has nothing to do with the cost of labor, why did all our manufacturers relocate to China. It didn't all go into their hands as profit, they were also able to reduce prices. Worked till they all did it, now they probably have the same profit margin as before, just with a bunch of Canadians losing good jobs and having to work at Timmies.

In short, because lower cost allows a company to sell at lower prices. It lowers the break-even point. Businesses outsource production to China so that they can LOWER prices. It doesn't work other way around. You can't raise input prices and expect to pass those increases on to the consumer in the form of higher prices, unless there's no competition or alternative for the consumer. Demand won't allow it. Consumers are concerned with price, not the producers' costs. When you go to buy a product, you don't give a shit about the manufacturer's costs. You care about how much you like the product and its price.

[andyt]

Yes. But, if all Canadian suppliers have to charge more to stay in business because they have higher labor costs than the US, then we'll pay higher prices here. If the prices get too high we'll just stop buying, but there's a lot of elasticity in demand (proven by the fact we pay higher prices). So wages are a part of that equation, just as much as regulations, cost of renting premises, etc etc.

[Lemmy]

andyt andyt:

Yes. But, if all Canadian suppliers have to charge more to stay in business because they have higher labor costs than the US, then we'll pay higher prices here.

We may be ASKED to pay more. Whether we will or not is a factor of demand for the product and the product's input prices have nothing to do with that. If you're closing the Canadian market to foreign competition then there's going to be across-the-board inflation. Producers can attempt to recoup their increasing costs in the form of higher prices, but it only works if the consumer is willing to play ball.

andyt andyt:

If the prices get too high we'll just stop buying, but there's a lot of elasticity in demand (proven by the fact we pay higher prices). So wages are a part of that equation, just as much as regulations, cost of renting premises, etc etc.

Elasticity is a specific economic concept and "a lot" isn't a meaningful measure of it. But wages are NOT part of the pricing equation. They're part of the costing equation. Costs + Profit = Price. At some point, rising costs will make profit fall to zero, but that doesn't mean the producer can just magically increase prices to restore profit because DEMAND determines consumers' willingness to pay. And if the amount they're willing to pay is less than costs + profit, firms must either shut down or find lower cost alternatives...and there's were outsourcing to China comes in.

[andyt]

But as we've seen, Lemmy, Canadians are willing to pay higher prices. Not because we want to, but because we have no choice. And our retailers have no choice but to pay their higher expenses, including wages, and would go out of business if Canadians could buy from their American competitors just as easily. Which they can on the internet. So, I gotta stick to the idea that our higher wages play some role in the higher prices we pay. I don't see how that's any different than you saying regulations raise our prices - either one is a cost to the seller, which they will attempt to pass on to the buyer. Since all sellers have these expenses they can't out compete each other, so we wind up paying higher prices.

[Lemmy]

I've done my best to try to put the economics into layman's terms for you. If you want to believe wages drive prices, knock yourself out, but it's the other way around.

[BartSimpson]

andyt andyt:

Oh, the US is just as greedy. The Canadian companies just are used to earning their money without working as hard for it. But there are other factors as well. The Americans pay their workers even less than we do, so the prices rest on the backs of the working poor. And economies of scale do apply, including to transportation costs.

Didn't read the article, eh?

If you had, you'd see that your argument is void.

Canadian made products sell for less in the USA than they do in Canada where your high-paid Canadian workers made the products.

Meaning that your knee-jerk leftist argument about American wages has nothing at all to do with this story.

[BartSimpson]

andyt andyt:

But as we've seen, Lemmy, Canadians are willing to pay higher prices. Not because we want to, but because we have no choice.

No, I think Canadians pay higher prices on any number of things because of a few factors:

1. You expect to pay more for things. You folks are culturally atuned to paying higher prices and your vendors are taking advantage of that.

2. Culturally speaking, Canadians are not typically going to challenge authorities and in this case the 'authorities' are businesses. You folks are both too passive and too polite to protest prices disparities so you end up paying more.

3. Pricing in Canada reflects hidden tax and regulatory costs that are not common to all US states. VAT and generally higher sales taxes cause ripple effects where vendors pass along those costs in their unit pricing. Thus an exported product can end up being cheaper than the same product sold domestically.

[peck420]

The big thing people forget is that the 'cost' side of my business and the 'revenue' side of my business (although definitely linked) are governed by seperate 'Supply and Demand' schemes. And these schemes are not always in line.

My cost of production can rise or fall based on the 'cost' supply and demand scheme. Ie: wages go up due to less labour supply, etc. But, this does not mean that my sales price will go up. If I attempt to sell at the new (higher price) customers do not have to buy. The 'revenue' supply and demand scheme could even dictate that I lower my sales price while my 'cost' side demands an increse.

This can lead to losses in profitability that can shut me down, but they are two seperate entities.

End of day:
Cost supply and demand is determined by my suppliers (this includes labour force).
Revenue supply and demand is determined by my customer.

The difference between the two is my profit/loss.
(Highly simplified, but you get the idea).

[DrCaleb]

BartSimpson BartSimpson:

andyt andyt:

But as we've seen, Lemmy, Canadians are willing to pay higher prices. Not because we want to, but because we have no choice.

No, I think Canadians pay higher prices on any number of things because of a few factors:

1. You expect to pay more for things. You folks are culturally atuned to paying higher prices and your vendors are taking advantage of that.

Maybe.

BartSimpson BartSimpson:

2. Culturally speaking, Canadians are not typically going to challenge authorities and in this case the 'authorities' are businesses. You folks are both too passive and too polite to protest prices disparities so you end up paying more.

Americans are always confusing 'polite' and 'weak'. Sorry, no. If we don't like the price, it stays on the shelf. We don't riot in the streets if the newspaper rises a nickle, because in the long run, it isn't important enough. We stop buying and the newspaper goes under. Problem solved.

BartSimpson BartSimpson:

3. Pricing in Canada reflects hidden tax and regulatory costs that are not common to all US states. VAT and generally higher sales taxes cause ripple effects where vendors pass along those costs in their unit pricing. Thus an exported product can end up being cheaper than the same product sold domestically.

So, if they reflect all the different taxes etc, why do they all have the same price even in different provinces with different tax rates, including ones with no sales tax?

If they are produced in say, China, why do the Canadian and US prices differ so greatly?

And: How can Audrey's books sell their stock at the US price, if there's no profit in it?

http://www.edmontonjournal.com/news/Aud ... drop_story

[Proculation]

I've read (or heard) somewhere that, for exemple, the car industry charges more because the regulations are different here (more regulations) than in the US. Is this factor the main one for that high difference ? Probably not.

[Zipperfish]

That's odd because I've read that Canadians actually search sales out more than the Americans. Or at least that we are more suscpetible to a "Sale" marketing strategy, which may not be the same thing.

Last time the Loonie went qway over par, there was a bunch of outrage on TV (particularly with respect to books/magazines, since they list the Can and US prices right on them) and soon enough some the big booksellers announced that the the cheaper of the two prices would be offered to the customer. (Of course, then you got the independents complaining that they couldn't compete wiht the big bookstore chains and offer this deal).

If the dollar stays at par, the Candain prices will drop. 90% of Canadians live wihtin 50 miles of the US border, and as the price differntial becomes more pronounced, more Canadians will go cross-border shopping. I'm gassing up there this weekend.