Quote:
Originally Posted by HansTWN
Well, if Amazon keeps the prices for bestsellers below cost for eternity, then yes. In that case consumers benefit and I don't see what the scary thing about the "monopoly" would be. But the scenario some are painting here is that they will then raise the prices to clean up --- which again would make it very easy for someone else to come in and compete with them. So, which one is it?
|
It is both. When Amazon is threatened by competition, it sells at a loss and lets other parts of its business pay the bills. As soon as the competition disappears, Amazon increases prices so that ebooks support themselves. Then when someone else comes along who tries to undersell Amazon and be competitive, Amazon cuts prices to below cost again and lets other parts of its business support the ebooks. When the new competitor goes out of business because it can't sustain the losses, Amazon raises its prices so that ebooks support themselves. When a new competitor comes along and tries to compete with Amazon, Amazon cuts prices to below cost . . .
This is how it is done. This is how Amazon is likely to act because shareholders will demand profits. Is it guaranteed that Amazon will act this way? No, but how likely is it based on current practices that Amazon will let someone undercut it? Not likely at all.