The Great Hippo wrote:
BattleMoose wrote:The action of the individual involved, is essentially towards equilibrating the price of the textbooks in the respective countries. Acting by himself, I doubt he could have much impact but if done en masse, essentially the price of the text books will be the same across both countries. If this were to continue, the publisher would take actions to maximize its profit, either stop selling to the "cheaper country" completely, or sell it to the "cheaper country" at first world prices. Both are negative outcomes for pretty much everyone, except the leeches trying to take advantage of an artificial and beneficial price gradient.
Isn't it possible that instead of increasing prices in the poorer region, a company might reduce the prices in the richer region to directly compete with the fellow who's engaging in arbitrage? I realize that's not the way it might go--but it's also another possibility, right? And depending on the nature of the arbitrage, it might turn out to be the most profitable course of action--yes?
I am working on the assumptions that the prices X and Y are selected so as to maximize profits in both richer and poorer regions.
And, that most of the profit will come from richer regions.
Now if I come along and buy heaps of product at cost Y and sell them in a rich region at +15% not only would the original company have to drop its prices to Y +15% to compete but they would also have lost market share to me. All products that I have resold, they only originally sold to me at Y and could only collect that margin.
Under this new dynamic, wherein I am seriously reducing their income, I'm fairly confident their best option would be to raise the price of their product to X in the poorer regions, hurt their profit from poor regions but eliminating arbitrage. Under this new dynamic, this would be the route that would maximize their profits.
Under this new dynamic, profits for the original company are decreased and the price in poorer regions is increased, both negative outcomes. The only loser is me, who can no longer practice arbitrage.
I'm also confused as to how this is a violation of copyright law. I suppose because there's no governing body for 'buying things in country X and selling things in country Y' where said thing is not illegal to sell or buy in either country?
I don't know if it is. I am arguing that it is something that we shouldn't allow, as it will produce negative outcomes.
I would support a mechanism which both encourages the production of new copyrighted materials and makes Y as low as possible.
Being able to charge different amounts for the same goods in different regions can produce this outcome, if certain protections are included, otherwise Y = X and this is not an outcome that I think would be good.
I guess I'm just confused as to why we should expect Y to always increase to X. When arbitrage leads to a sufficient loss in profits to bring Y to X, I'd expect these two values to start approaching each other--but I don't find it intuitively obvious that arbitrage will lead to a sufficient loss in profits, or that the direction of that loss will increase Y in all cases (rather than decreasing X in some cases).
The two values won't approach each other, that is to say, the price in the richer regions, under arbitrage, will be higher than Y, so that I can turn a profit, there will always be a distinct difference.
The original company, being forced, under arbitrage to reduce their price from X to Y +15% and lose market share, I think will hurt their incomes, very very very badly. So much so that they will stop selling their product at Y, everywhere.
Thats my reasoning, I think it makes sense.
Either which way, I would support the solution that both maximizes the potential for the generation of new copyrighted material and reduces Y as much as possible.