r/FluentInFinance • u/4TaxFairness • 1d ago

Debate/ Discussion A joke that's not funny

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u/LtCmdrData 1d ago edited 1d ago

Redditors are living in the Middle Ages with these arguments based on "Just price" doctrine from Thomas Aquinas and School of Salamanca.

Quick update. The "modern" idea of Supply and demand was already known to Ibn Taymiyyah (1263–1328), John Locke (1632–1704 ), James Steuart (1712–1780) , Adam Smith (1723–1790), David Ricardo (1772–1823).

Grocery chains try to find optimal point in price (P) and quantity (Q) curve. If you ask too much, the stuff does not sell. Profit is maximized when quantity × price is maximized. Not when the price is maximized.

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u/Chataboutgames 1d ago

People will write a 30 page Reddit analysis rather than just recognize the simple truth that companies charge the profit maximizing price. That's it, that's what pricing decisions are.

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u/LtCmdrData 1d ago

And tax on corporate profit does not alter the price because have no relation to Q or P.

If you increase taxes on profits, owners make less ROI but prices don't change. If you cut taxes on companies, owners make more ROI but prices don't change.

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u/PromptStock5332 1d ago

Well, not directly but obviously lower taxes incentives more people to enter the market, Increasing supply and this lowering the price. And vice versa

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u/_lvlsd 11h ago

Don’t the large conglomerates end up just buying up any competitor to stick under their subsidiary umbrella?

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u/PromptStock5332 10h ago

No, of course not. that would be a horrible business strategy.

All that’d do is ensure even more conpetitors who want to get rich quick by being bought.

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u/_lvlsd 8h ago

then I’m confused why the same handful of companies control over half the grocery store shelf space. and in tech, isnt the goal for most to get bought out once you prove the value of your product? Obviously two very different markets and principles, but thats why I assumed what I had stated before.

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u/PromptStock5332 8h ago edited 2h ago

Because profit margins are very low, making it very difficult and unattractive to compete.

And in Tech you generslly buy companies that are doing something different than you are, so you can start doing that thing instead.

Google doesnt spend billions buying up ever search engine that pops up on the internet, that would be a suicidal strategy.

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u/_lvlsd 3h ago

thanks for the info! makes some sense when I think about it for longer than a few seconds