Digital BW, The Print

Well Keith

di·a·tribe   :A bitter, abusive denunciation. 
Not so much. (I won't grade you on your use of English)

Let us explore the existence of barriers to entry here.

A little history.  "Currently Section 1 of the Sherman Act (1890) and 
Section 3 of the Clayton Act (1914) prohibit tying agreements 
that "restrain trade substantially." In addition, there is a vast 
antitrust case law that forbids firms with dominant market shares in 
one product (the tying good) from requiring buyers to take a second 
product (the tied good) as a condition of sale or lease" 
(http://www.independent.org/tii/news/9809Armentano.html)


1.  We have at least four very large players in the market.  If you 
agree that they compete among themselves, then I believe your whole 
argument evaporates.  The companies can only price their products, 
printer+consumables, such that they recveive a fair return on the 
capital invested.  If Epson gives away it's printers but charges $300 
for cartridges, they are unlikely to do well in the marketplace.  
People will buy from one of the other suppliers because they have 
considered the total cost of the product.  The ability to charge 
infra-marginal total prices is constrained by the presence of 
competition. N'est ce pas?

2.  The fact that Epson has "chipped" its cartridges (a measure that 
has already been defeated)is proof that the entry barriers to 3rd 
party cartirdge makers cannot be particularly high.  The story that 
you quoted speaks to the high market share (11 percent)of these 3rd 
party vendors.  I am having trouble seeing this as a difficult market 
to enter. 

So, we have a market where the incumbents are competing among 
themselves and where 3rd party vendors can easily enter the higher 
profit, consumables segment.  No wonder no-one is entering the 
printer market.  I'm thinking that this might not be a ripe target 
for price regulation.

By the way, could it be that ALPS was killed by competition?

John



--- In DigitalBlackandWhiteThePrint@y..., "Editor P.O.V. Image 
Service" <editor@p...> wrote:
> johnny999_99 wrote:
> 
> >
> > The only real question here is whether or not the major suppliers 
are
> > colluding among themselves to maintain high cartidge prices.  
> 
> Since when?
> 
> The question is not restricted in any way to whether the 
manufacturers 
> are engaged in any kind of collusion or conspiracy to fix prices 
etc... 
> No-one has even suggested something so ridiculous...
> 
> Go back and read the original post and the associated articles.
> 
> What the EU Commissioner and Members of the EU Parliament are 
saying is 
> that the OEM manufacturers are using control of the consumables, 
through 
> warranty and  technologies designed to prevent the use of 3rd party 
> inks, to shift the cost of the printers to the consumables in an 
> anti-competitve manner..
> 
> Shifting those costs does several things for the OEMs..
> 
> 1)  It makes competition for printers less likely, as new entrants 
need 
> to assure a supply chain which allows that kind of cost-shifting 
> (meaning it has to be a VERY large corporation that can have a 
chain in 
> place when printers are released) -- WHY? Because consumers will 
> purchase a printer (by and large) based on initial sticker price.. 
If 
> you don't cost-shift and other vendors do, you get reduced sales..
> 
> 2)   It prevents reuse of the recyclable elements of the printer (a 
> violation probably of both EU Law and laws in several US States)  
> 
> 3)  It prevents the use of cheaper and at times better consumables. 
>  Voiding a warranty because you use non OEM toner or paper in your 
> copier is highly unlikely, yet it is a component of OEM inkjet 
warranties.
> 
> So, this has nothing to do with outright collusion or conspiracy to 
set 
> pricing...
> 
> Anti-trust and anti-competitive practices are not restricted to 
those 
> elements..
> 
> Your last little diatribe would have probably received a D/D- in 
Econ 
> 101 for its overly simplistic and narrow-minded analysis. I would 
> suggest you need to retake the course and actually read the course 
> materials, as well as the background to this discussion before 
again 
> taking so adamant and provocative a stance,
> 
> [Keith]
>  
>  
> 
> 
> 
> 
> [Non-text portions of this message have been removed]