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Look at it this way (archive)

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Posted by MikeW on September 28, 1999 at 09:19:57:

In Reply to: He is wrong! posted by . on September 28, 1999 at 00:41:26:

You're mixing economics and law. The two don't necessarily have anything to do with one another. If this type of pricing does hurt the consumer, it would be pretty easy to prove, especially givin the nature of the discovery process in a lawsuit. I'd sue GM and a couple of their larger multibrand dealers. I would then supeona all of the sales invoices from the dealers for the last couple of years. I (actually a small army of temps) would bang the invoice information into a computer, and than do a statistical analysis. If it shows that in similar situations the Saturn pricing model results in higher net profits for the dealer, and/or higher per car profits for GM, I think you've got a pretty strong case that the consumer has been harmed. Tie this to the fact that it stems from a anticompetitive practice (coordinating sales prices between dealers), and the defendants would have a pretty hard time disproving the case.

: I know the whole history of U.S. antitrust regulation. Kinda taught a course while working on a Ph.D. in Economics for one of the top 10 Econ departments in the U.S.

: Your proposed class action suit is on shaky ground. Very hard to convince a judge that it harms the consumer because Saturn will just say that the competition posed by the other car manufacturers is enough to impose some price discipline on them. And then they'll add that consumers actually like the fixed price approach because it frees them from all the anxiety and inconvenience associated with traditional car-buying practices. Finally, Saturn can then trot out an endless parade of real customers who will testify that they like the no-haggle pricing.

: You have to keep in mind, fixed prices by one mfr in a market that has lots of competing mfrs will not harm the consumer. So what if he is able to compel his dealers to offer a uniform price? He'll have to fix it low enough to still get some business. You think if GM suddenly is able to impose uniform pricing on all their dealers, GM will be able to jack-up their prices and not hurt their bottom line? They'll still have to contend with Ford, Chrysler, Toyota, Honda, etc. in the world's most competitive car market.

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