For the drug example we assumed drug companies could sell their drugs in a more expensive price in a pre hoc fashion. If they were able to sell their drugs for that price everywhere they would do that already. However, without monopolies, market prices tend to coalesce at the supply demand intersection. If drug companies fix their prices as exorbitantly high everywhere as in Usa, the local competition would just drive the price down. This is not possible for the novelty drugs, during which period companies recoup their r&d expenditures, but when a pill of daraprim sells for $750 (which is pyrimethamine, almost a 70 year old drug now) which can be bought for .25$ in other parts of the world, you gotta admit price discrimination in monopolistic markets is just a pseudonym for ripping off customers
@@acctsys the problem is not the incentive on new drugs. You can invent a new agent and sell it for 1M $, if there is a demand for that drug at that price. Don't forget that drugs rarely get used in novel scenarios, they usually replace or supplant already existing drugs, albeit with some new advantages. If your alternative is a 20 cent per pill otc, and your new drug is only 10% more effective at what it does, you are not going to sell that pill for 200$. The problem in US pharma industry is they charge 1000x for a drug you can find in other parts of the world, that was developed 70 years ago. This is not R&D budget for new products, this is ripping the customer off fair and square. And as you cannot import drugs unlike almost anything else, you are stuck with paying that exorbitant price. This is against the principles of free market, and hampers innovation as even century old drugs make enough profit to run the industry.
@@LeFatalpotato I agree that the market should be free. By arbitrage, the price should settle to about the imported cost of the drug plus a bit of profit. My point was, let pharma do their price discrimination. I did not mention that government should be part of that. Crony capitalism is a cancer IMO. If pharma finds a business model where they can discriminate between individuals, as much as that sucks, it would be fair game.
@@acctsys you're absolutely right. Drug companies should be able to "sell" their product, like every other company can. If they can sell a product for thousands of dollars in an open market, they absolutely should be able to. However the pharma market in US right now is like corn laws back in the day in UK. The market is extremely closed, there are very tight regulations, so there is virtually no competition in any medication that actually matters, and all of this is happening in the country that prides itself being the cradle of capitalism. Arbitrage of medications from abroad would be devastating for other countries, but would be the best thing for us citizens.
What they said about University price discrimination is nonsense. I'm in California, in California we are only selling college education to students who are able to pay the highest prices. Students from within the state are no longer getting seats at California universitie. Out-of-state students, the ones who must pay the highest price, are taking up all the seats.
It is true that due to state budget cuts, the California university system relaxed the admission requirement for out of state applicants. Whereas previously they had to present scores higher than half of in state students, the new policies only ask that out of state students "compare favorably" to in state students. Some argue this is too weak a requirement given the amount of state funding California universities are still receiving even if, overall, in state applicants are still favored. However, if we apply the rule of thumb in the video, then price discrimination is beneficial as long as output is maintained at the same high level as before the budget cuts. The high level of output is benefitting all applicants, including in state applicants.
Ion Sterpan You are mistaken. Even if 'output' is increased, in this case meaning more students are educated at the UC system per year than had previously occurred, fewer poor students get educated by the UC system when the number of seats taken by rich out- of-state students exceeds the number of seats added to the UC system.
No lol. The quantity of education isn't static. They can enroll more people if they want to, it would just increase costs. But since out of state and international students pay 4x-10x more that the in-state students, the profit far outweighs the cost. They can use this profit to subsidize more in-state students. The enrollment for both in California has risen.
For the drug example we assumed drug companies could sell their drugs in a more expensive price in a pre hoc fashion. If they were able to sell their drugs for that price everywhere they would do that already. However, without monopolies, market prices tend to coalesce at the supply demand intersection. If drug companies fix their prices as exorbitantly high everywhere as in Usa, the local competition would just drive the price down. This is not possible for the novelty drugs, during which period companies recoup their r&d expenditures, but when a pill of daraprim sells for $750 (which is pyrimethamine, almost a 70 year old drug now) which can be bought for .25$ in other parts of the world, you gotta admit price discrimination in monopolistic markets is just a pseudonym for ripping off customers
Take the incentive of profit away and much fewer drugs would be made in the first place.
@@acctsys the problem is not the incentive on new drugs. You can invent a new agent and sell it for 1M $, if there is a demand for that drug at that price. Don't forget that drugs rarely get used in novel scenarios, they usually replace or supplant already existing drugs, albeit with some new advantages. If your alternative is a 20 cent per pill otc, and your new drug is only 10% more effective at what it does, you are not going to sell that pill for 200$. The problem in US pharma industry is they charge 1000x for a drug you can find in other parts of the world, that was developed 70 years ago. This is not R&D budget for new products, this is ripping the customer off fair and square. And as you cannot import drugs unlike almost anything else, you are stuck with paying that exorbitant price. This is against the principles of free market, and hampers innovation as even century old drugs make enough profit to run the industry.
@@LeFatalpotato I agree that the market should be free. By arbitrage, the price should settle to about the imported cost of the drug plus a bit of profit.
My point was, let pharma do their price discrimination. I did not mention that government should be part of that. Crony capitalism is a cancer IMO.
If pharma finds a business model where they can discriminate between individuals, as much as that sucks, it would be fair game.
@@acctsys you're absolutely right. Drug companies should be able to "sell" their product, like every other company can. If they can sell a product for thousands of dollars in an open market, they absolutely should be able to. However the pharma market in US right now is like corn laws back in the day in UK. The market is extremely closed, there are very tight regulations, so there is virtually no competition in any medication that actually matters, and all of this is happening in the country that prides itself being the cradle of capitalism. Arbitrage of medications from abroad would be devastating for other countries, but would be the best thing for us citizens.
@@LeFatalpotato oath
Bruh you helped me pass my class! Thank you! Walking Goats.
thanks for the quality of the presentation
excellent presentation , thank you
fairly good lesson. helps me a lot! 赞一个
In short the bean counters objective is to take the most money from the have-nots as they possibly can without completely ruining their market.
Take isn't precise. It's voluntary for both. "Have nots" is not correct if they are willing to buy the service at the lower price.
Ty
What they said about University price discrimination is nonsense. I'm in California, in California we are only selling college education to students who are able to pay the highest prices. Students from within the state are no longer getting seats at California universitie. Out-of-state students, the ones who must pay the highest price, are taking up all the seats.
It is true that due to state budget cuts, the California university system relaxed the admission requirement for out of state applicants. Whereas previously they had to present scores higher than half of in state students, the new policies only ask that out of state students "compare favorably" to in state students. Some argue this is too weak a requirement given the amount of state funding California universities are still receiving even if, overall, in state applicants are still favored.
However, if we apply the rule of thumb in the video, then price discrimination is beneficial as long as output is maintained at the same high level as before the budget cuts. The high level of output is benefitting all applicants, including in state applicants.
Ion Sterpan You are mistaken. Even if 'output' is increased, in this case meaning more students are educated at the UC system per year than had previously occurred, fewer poor students get educated by the UC system when the number of seats taken by rich out- of-state students exceeds the number of seats added to the UC system.
Rest in peace Ion
This comment aged nicely
No lol. The quantity of education isn't static. They can enroll more people if they want to, it would just increase costs. But since out of state and international students pay 4x-10x more that the in-state students, the profit far outweighs the cost. They can use this profit to subsidize more in-state students. The enrollment for both in California has risen.
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Forzenutob
***** jijgfgjh
"H" 3 replies. lol
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