Re:France has approved a digital services tax despite threat...
by avip on Thursday July 11, 2019 @04:14PM
(#20415345)
Companies raise prices based on demand curve, not cost.
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Re:France has approved a digital services tax despite threat...
by nybble41 on Thursday July 11, 2019 @05:48PM
(#20416193)
An individual company sets its prices to optimize revenues. That depends only on the demand curve and is independent of costs. However, it's a rare market where even the most marginal suppliers earn enough producer surplus to make up for significant increases in production expenses. If the optimal revenue isn't enough to turn a profit then the business will close. That decrease in supply with no change in demand allows the remaining suppliers to raise their prices—though not necessarily by the full amount of the increase in cost, because only part of the decrease in supply manifests as an increase in price. The rest manifests as potential consumers doing without the good altogether, perhaps turning to lower-priced (but less satisfactory) substitutes.
Re:France has approved a digital services tax despite threat...
by mc32 on Thursday July 11, 2019 @04:19PM
(#20415384)
That’s not what they say when the subject of tariffs comes up. “We’ll have to pass it on to consumers”.
Re:France has approved a digital services tax despite threat...
by zaroth on Thursday July 11, 2019 @04:32PM
(#20415528)
But in reality, a share of the tariff is paid by the supplier and a share is paid by the consumer.
And if I remember my classic macroeconomics class correctly, that share depends precisely on the elasticity of demand (slope of the demand curve).
Re:France has approved a digital services tax despite threat...
by seirl on Thursday July 11, 2019 @07:26PM
(#20416818)
This is correct.
Re:France has approved a digital services tax despite threat...
by dredmorbius on Thursday July 11, 2019 @06:03PM
(#20416308)
Economic facts pay little heed to economic rhetoric.
Re:France has approved a digital services tax despite threat...
by FranzFerdiNaN on Friday July 12, 2019 @01:25AM
(#20418439)
Companies only ever tell the truth of course.
Re:France has approved a digital services tax despite threat...
by AimForTheBushes on Thursday July 11, 2019 @06:59PM
(#20416675)
This is unequivocally false. A 3% increase could make their costs higher than revenue. They would increase their prices or go out of business.
Re:France has approved a digital services tax despite threat...
by toyg on Thursday July 11, 2019 @07:04PM
(#20416698)
> A 3% increase could make their costs higher than revenue.
This might be true for many businesses but likely not the large digital ones, which enjoy ungodly margins (hence why they grow so much and so quickly). A unicorn's back is strong enough to carry quite a few saddles.