Quote:Yes FD, overall sales will have to be worth more than overall costs - otherwise the business will go broke. But that is not the same thing as saying that all costs are definitely passed down.
Yes it is Gandalf.
Quote:For example certification costs could change the end profit of a given product from (say) $10 to $9 if the cost is not passed on. There are many reasons why a business would accept this sort of hit to their profit - market share, remaining competitive etc.
But not because this particular cost is somehow different from every other cost of doing business. And if the same cost is borne by their competitors, the 'remaining competitive argument does not apply either.
Quote:The point is, if the business is efficient and profitable enough to start with, they can afford to be burdened with additional production costs without impacting the end price.
Of course they can afford it. They could abandon all their profits in the name of not passing individual costs costs. But they won't, because they are a business, not a charity.
Quote:the producer makes the strategic decision not to pass on the new production cost
That is not a strategic decision. That is muddled thinking from someone who would say anything to keep the halal spin machine turning. I get that it is possible. It was your strawman that I said it was impossible.
Quote:he does this because he considers that increasing the price by $2 would make him uncompetitive
Here is your muddled thinking Gandalf.
Quote:but the payoff is an anticipated surge in profits - even above his previous $10 - that comes from increasing his market.
Here it is again Gandalf. Sacrificing 20% of your profit margin is not going to lead to a surge in profits unless you had priced the product incorrectly to begin with - in which case it has nothing at all to do with the Halal rort to begin with.
Quote:FD's up to his old tricks of focusing on one isolated example
It is a halal rort Gandalf. Of course I am going to choose the most transparent example.
Quote:pretending that he doesn't know that we are obviously talking about the domestic market.
Earth to Gandalf: read the opening post.