| ▲ | degamad a day ago |
| Hypothetical: Pepsi starts using AI in some magical way that allows them to increase their margins. This allows them to reduce prices while increasing profits. Price-sensitive customers switch from Coca Cola products to Pepsi products. Coca Cola loses some market share, reducing economies of scale, and reducing margins, thus reducing profits. As the cycle repeats, Pepsi moves to dominate the market, and Coca Cola is slowly squeezed down. |
|
| ▲ | pdimitar a day ago | parent | next [-] |
| Realistic and historically accurate: Pepsi starts collecting the extra profits with zero price reductions. |
| |
| ▲ | fc417fc802 a day ago | parent | next [-] | | In a duopoly, probably yes. However in a more competitive environment where several incumbents have achieved a given optimization a race to the bottom is likely to occur because it only takes one of them preferring to increase their relative market share to kick the process off. | | | |
| ▲ | SoftTalker a day ago | parent | prev [-] | | sacrificing even more profits that may be had by undercutting coca-cola's price? The CEO would be fired. | | |
| ▲ | DangitBobby a day ago | parent | next [-] | | Markets generally don't follow Econ 101. There are effects beyond first order when it comes to pricing. | |
| ▲ | pdimitar a day ago | parent | prev [-] | | Really depends on the concrete numbers and the projections. You could be right, I could be right, I am only saying what I've witnessed historically in general. Greed trumps a lot of other fairly rational courses of action. |
|
|
|
| ▲ | ares623 a day ago | parent | prev [-] |
| Ah yes, magical hypotheticals |
| |
| ▲ | fc417fc802 a day ago | parent [-] | | Do you have a constructive objection to the described market dynamic? | | |
| ▲ | pdimitar a day ago | parent [-] | | Yes: historically this is not what I have observed businesses doing. They'd fight tooth and nail to reduce expenses for the fatter profits; cost savings are seldom if ever passed to consumers. | | |
| ▲ | eru a day ago | parent [-] | | Obviously they don't voluntarily pass on cost savings to customers. That's why competition is there for. Btw, check how much RAM costs today per byte than eg 20 years ago. Even including today's AI driven price increases. Or check how much it costs to keep your house light up nice and bright compared to 50 years ago. | | |
| ▲ | Ekaros 20 hours ago | parent [-] | | How much does a car cost now? Surely with automation, robots and general efficiency gains every where in the production chain they should be lot cheaper than they used to be. The companies seem to rarely keep the cheaper models around too for something. Surely they could sell them for right price. |
|
|
|
|
