Re:Google gets license to test drive autonomous cars on Neva...
by CWuestefeld on Tuesday May 08, 2012 @09:38AM
(#3943511)
What actually happens is the people who control "production" end up with most of this extra money.
This is not true. It's actually a pretty well-understood economic phenomena.
When changes to pricing is forced by changes in upstream costs, as with this example, but also as forced by increased taxes/fees, etc., you can predict who will bear the brunt of the cost (or enjoy the windfall) based on the elasticity of the buyer.
For example, we know that the elasticity for gasoline is very inelastic, because consumption only changes a small amount in response to price changes. This means that an increase in taxes on the petroleum industry will be borne mostly by the consumer, and not the producer.
However, for other industries where consumers are more likely to change their spending habits in relation to price changes, it will be the consumers that are on the winning side.
This is not true. It's actually a pretty well-understood economic phenomena.
When changes to pricing is forced by changes in upstream costs, as with this example, but also as forced by increased taxes/fees, etc., you can predict who will bear the brunt of the cost (or enjoy the windfall) based on the elasticity of the buyer.
For example, we know that the elasticity for gasoline is very inelastic, because consumption only changes a small amount in response to price changes. This means that an increase in taxes on the petroleum industry will be borne mostly by the consumer, and not the producer.
However, for other industries where consumers are more likely to change their spending habits in relation to price changes, it will be the consumers that are on the winning side.