Greedy Bastards.....

You seem incredibly fixated on government needing to be involved... what happens with the creation of a monopoly? The free market allows for monopolies to be created. It allows for said monopolies to use that power to crush any and all new comers. government doesn't need to be involved at all for a market that is less than free for an item to exist. In some cases only a clever or not so clever marketing scheme.

You're going through some interesting backflips. Everyone knows if there was no demand there would be no scarcity. But as long as there is some demand, allotments can be used to create scarcity. Slowly, you're grasping it.

I made a comment within the narrow subject scope of the thread. Stay within that scope.

Reply to
Brent P
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The price increase in Ford GT500's is not a function of supply and demand or a free market. It's the result of two economic factors working together; the price elasticity of demand (specifically an inelastic demand curve) and the realization that the GT500 can be classified as a Veblen-good.

Supply and demand is only applicable to common shared goods which are in wide demand. The GT500 is a luxury good (IE a Veblen-good) and does not fall within this definition. For example, supply and demand has nothing to do with the pricing structure for a $2.5 million dollar yacht.

While it's true that Ford controls both the amount of production (the total number of vehicles produced in any given period) as well as the number of vehicles alloted to any specific dealership, this does not in an of itself create an artificial scarcity of the item. All products are produced in limited supply and it is the manufacturer's job to match production rates with consumption (consumption and demand are different).

The price isn't being increased because of greed (greed is both a given and a requirement in a transaction when you're talking about a luxury item), or availability. It's up because the dealerships realize that they can increase the price without reducing the demand for the item (IE it's inelastic - no matter how high or low the price goes the same number of people will want it).

In the beginning stages demand for a Veblen-good is fixed and only increases due to the bandwagon effect. As more people buy the product demand will increase in direct proportion to the perceived exclusivity of the product in question (although these two ideas seem counter to each other). So, over the next six to twelve months you'll slowly see more GT500's hitting dealer showrooms, and yet the price probably wont come down significantly.

If a Ford dealership increased the price of say a red V6 Mustang 100% no one would buy it. Why? Because although it's a high demand item, it's not preceived as a must-have item (something you can't live without) or an exclusive item. Buyers would simply switch to another car.

People will pay the higher price for the GT500 because it's perceived to be an exclusive item that's worth the price.

mark h

PS - Despite what some think the US operates as a free market. You can argue that Federal and State sales tax impinges on a free market, but that argument has been run over too many times to count. The government itself does not control, or restrict the production, sale or procing of the GT500. However, there are several staple type products (such as milk and sugar) which are artifically price controlled. These items could be considered to exist outside of the free market.

Reply to
Mark Henry

Please explain how alloting too little to one area and too much to another doesn't create scaricity in the area with too little. Spreading a product thinly can create a scaricity.

Demand does vary for the GT500 as witnessed by numerous people in this newsgroup alone who may buy at ~$40K but certainly not at $65K. But for that to happen there has to still be equal or more people left than there are cars by the time the price hits $65-70K. This can helped greatly by using allotments. This way the cars all won't go to one region where there are a ton of people willing to pay $59K but not $65K. The fact there the product is in say, NYC, doesn't change the market situation in LA unless either product or buyer knows it exists on the other side of the nation and buyer and seller can meet up.

As pointed out by many in the case of the GT500 including myself.

Some people are idiots, some idiots have money they wish to waste on some perception of image.

Reply to
Brent P

Clairification... for the demand to appear to be unchanged.

Reply to
Brent P

Indeed it was, and it was the only price displayed. It was $43K and change.

I considered that, but I doubt I could find a judge to agree with it. They'd probably say something about MSRP not being an advertised sale price.

Reply to
Henry

The others won the dabate long ago. You are just too dense to realise it.

Reply to
Hairy

How's that? with irrelevant tangents with made up views they assigned me? Because not one has shown that ideal free market competition existing between retailers. In fact if you pay attention each one conceeded that allotment eliminates the competition between retailers and then went to some irrelevant tangent such as ford having a right to do it and about dealers having a right to maximize profit and whole host of other tangents that well I never disagreed with them on despite their attempt to make it seem that way.

Thing is, if you paid attention you would have noticed I never argued that ford and the dealers didn't have a right to do it, only stated they did it. So try to pay attention and don't fall for such nonsense next time.

Reply to
Brent P

Here's my take on the dealer's strategy, and all dealers with a high demand product for that matter. There are just so many people that will pay $65k for a GT500 so the dealers let them step to the plate and buy first. Then they wade through those that will pay $60k, $55k, $50k, $45k etc. This takes time and Fords initial production run of GT500s lets them all enact this strategy at the same time, probably by design. After the crazies with more money than sense have their cars in the garage the only way for the dealers and Ford to keep demand up is to reduce the price. Over time, the price will fall and MSRP, or below, will become the norm. Nearly every dealer uses this strategy for high demand specialty vehicles and to a lesser extent on every vehicle they sell. After a few years they will redesign the car or come out with a new model to start the cycle all over again. Since it is the norm in the auto industry, my guess is this is a proven way to maximize profits for the automakers AND the dealers.

This entire process is based on supply, demand and the desire to make a profit which transpires in a free market system. To me, the entire auto industry is very homogeneous in the way they operate. There is really little difference between them. The system we have now is the result of

100 years of refinement. The interesting thing about the system is that dealers can compete against each other but, as a block, they compete against other automaker brands/dealers. This is why any comparison to Best Buy, Circuit City, Target, Walmart etc. is useless. I can go into any Best Buy within 200 miles of my house and know the price of a Sony TV is X dollars. I can go to every Ford dealer within 200 miles and get a price for an F150 and get a unique price from each one.

Brent seems to think its not a free market unless every dealer and automaker relationship operates the same as between the end consumer and the manufacturer. He is missing the point that they are just one component that when combined with all the other automakers and dealers constitute the free market of which the consumer is really the most important part. IMO, this is THE major flaw in his argument.

Reply to
Michael Johnson, PE

You try again to say I am wrong by expanding the scope and then deciding what my view on that expanded scope is. Oddly you continually choose a view for me that you can easily knock down.

All best buy stores are owned by best buy. Meanwhile no ford dealer is owned by ford. Ford dealers are independent businesses, but the allotment schemes means that they don't compete with each other in the sense of a free market on the model with small allotments.

You keep agreeing with that, as you did on this post I am replying to, but then you tack on some tangent where you make up a view for me and then knock it down. I never stated anything even close to what you made up above. So, I'll repeat it again.

My point is simple, the independently owned dealerships are not competing with each other in an ideal free market manner because of the allotment scheme. As you stated in your post, you can get 15 different prices from

15 different ford dealers and pit one off on the other on an F150 because they are competing with each other for your business. But with the GT500 are they competing for it? Or is it, pay our price or go f yourself?
Reply to
Brent P

Brent, I have come to one conclusion. You are a bitter person and a complete idiot on this matter. I feel sorry for people that have to work with you or for you based on the attitude you show here. Respond if you wish but I'm done with you in this thread. Good day.

Reply to
Michael Johnson, PE

So now you again resort to being insulting. I think I've showed a great amount of patience considering you and others have been rather insulting and continually made false claims that I was arguing absurd things about ford not having a right to do allotments.

Your last post was fine except for the last paragraph. Again you showed that we were in agreement that (small) allotments destroy the dealer to dealer competition and is not an ideal free market type situation where retailers compete. I agreed with it up to the last paragraph where you had to toss in that crapola. Then once again, I had to repeat myself and make it clear what I have stated. You might want to examine why you need to be insulting and make up things so you have something to knock down.

I've come to a conclusion about you. You understand my point, you accept it and agree with it because you've repeated it back to me with different words multiple times. But you need to 'win' the thread. To 'win' the thread you make some arguement up for me and then knock it down. Then you throw in some insults as icing.

I'm sorry I just didn't roll over and let you get away with that crap. My only error here was thinking that it was misunderstanding and that if I just restated myself you'd see the agreement.

Reply to
Brent P

On Mon, 30 Oct 2006 23:48:33 -0600, snipped-for-privacy@yahoo.com (Brent P) wrote something wonderfully witty:

Ah now I see. In one scenario the business needs you as a consumer (when they have unlimited product), in the other you need the business as a supplier. You aren't happy when you need the business as a supplier. There are many products in the marketplace where it is pay our price or go F yourself, especially in the luxury goods segment. I think the GT500 could easily qualify as being a luxury good right now.

Reply to
ZombyWoof

On Mon, 30 Oct 2006 15:53:06 -0600, snipped-for-privacy@yahoo.com (Brent P) wrote something wonderfully witty:

Insulting? What was with the moron comment in a previous post?

Reply to
ZombyWoof

On Tue, 31 Oct 2006 01:16:04 -0600, snipped-for-privacy@yahoo.com (Brent P) wrote something wonderfully witty:

Fully explain in 250 words or less how Ford as a US Corporation has no "right" to market any of its products as it sees fit?

Geez now your arguing semantics of "Ideal Free Market" on one specific product across and entire product line? Man you really are reaching. How can one limited product destroy dealer to dealer competition? I bet some small dealers have decided not to even order any of their allotted models, I bet some might have even sold them at MSRP. None of use here know exactly what every single Ford dealership in the entire US has done or will do. I wonder how many dealerships decided to keep one of their allotted vehicles for the dealership owner or his favorite son. I bet at least one. Sure there are those that are out there doing some profit taking. That is what business in a capitalistic economy do. It is what you do when you sell your labor in the open market.

How could anyone understand your point when you've bounced all over the place with it. Are using broad economic terms to talk about one specific product model out of entire product line, a specialty model at that. One created as a marketing gimmick. Never designed to be massed produced at the level of any of the other cars off of which it is based. A car that after the pent up early demand passes may not even generate the sales level to justify continued production levels. Remember that Cobras were having to be discounted during there last year to move them off the lot, yet during the early years they were going at a premium price because of the way they were restricted to just certain dealers. Was that messing with the "Ideal Free Market" as well. If they are indeed screwing with the "Free Market" where is the "Free Trade Commission" at in all of this? Where are the class action suits by various State's General Attorneys?

Nobody is looking to get away with anything. Your base error was using an economics term to pick at Ford's marketing ploy because you don't like it. It's fine that you don't like the way that Ford approached the issue. It's fine that you don't like Capitalism and a demand economy, it's even cool that you don't like people with more money then sense, but your arguing a point that nobody else agrees with. Doesn't that tell you something? When Ford gets charged with manipulating markets you can come back and crow about how right you were.

Reply to
ZombyWoof

Did I fling something back at you? Awww... poor baby.

Reply to
Brent P

Fully explain in 250 words or less how the aliens known as the greys control all US corporations and the US government in an effort to transform the atmosphere of planet earth to better suit their form of life.

You can make up arguments for me, I'll make them up for you.

Reply to
Brent P

The bottom line to this whole thread, at least for me, is..

In order for a dealer to sell a car 30k over sticker, someone has to be willing to BUY the car at 30k over sticker. If no one buys the car at 30k over sticker, then the dealer will have no choice but lower his price to a point where there are people willing to pay.. or keep the car in his showroom, which I doubt, is any dealer's objective.

MSRP are 'suggested' prices... Every dealer has the option to ignore the suggestion... And that pricing decision is based on YOU the public....

If I could buy something for, let's say.. 35K then find someone that is willing to pay me 70k for it, you better believe that is what I'd sell it to them for...

Once the eager buyers with more money than sense wash through the system, the prices will level of to where the next level of consumer is willing to pay...

Reply to
tony

On Mon, 30 Oct 2006 16:04:58 -0600, snipped-for-privacy@yahoo.com (Brent P) wrote something wonderfully witty:

But that is what "Free Trade" is all about, Government restrictions and interference. Especially on a global basis with the establishment of tariffs & taxes. Forget about monopolies, although right now Ford does have a monopoly on the production of GT500's. They are the only ones making them and it is a proprietary product so that is OK.

You seem fixated on the fact that Ford is doing something "not right" and have said so numerous times. "Not right" implies wrong, immoral, or perhaps illegal. I can't see any of those things. It is a marketing decision. A way to apportion a limited supply of specialty vehicles as fairly as possible. Once those vehicles are in the hands of the dealers Ford central is out of the picture.

What I really what to know is how you in your infinite wisdom would have handled the issue given Ford is only going to be producing a finite number of these vehicles every year. Would you let the dealer with the most available resources order up the entire supply an corner the market on them? Force dealers to sell them at only MSRP creating an instant secondary market? Exactly what is your answer to the situation?

Reply to
ZombyWoof

On Mon, 30 Oct 2006 21:35:48 -0500, Henry wrote something wonderfully witty:

Of course they would. That is why MSRP stands for Manufacturers

*Suggested* Retail Price.
Reply to
ZombyWoof

On Mon, 30 Oct 2006 22:52:56 -0600, snipped-for-privacy@yahoo.com (Brent P) wrote something wonderfully witty:

The dealers are still competing on all the other products that they sell. All of the other new cars, used cars, various services & products. So they have one specific item that they are pretty much able to set their own price on. BFD, horray for the dealers one instance where the consumer doesn't have them over a barrel. Been a long time since they were in that position.

Well duh, we all know they did it. We really didn't need you to point it out. So all of this back & forth was you pointing the obvious?

Reply to
ZombyWoof

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