In article >, Michael Johnson, PE wrote:
> Brent P wrote:
>> In article >, Michael Johnson, PE wrote:
>>
>>> The market price of any Ford vehicle is virtually unaffected by dealer
>>> allotments.
>>
>> Rationing affects market price.
>
> You're all over the map. Rationing? WTH are you talking about? This
> isn't 1942.

Allotments are a form of rationing. Dammit grow a clue.

>>> The allotment system for popular vehicles is Ford's way of
>>> rewarding certain dealers for their performance and not as a way of
>>> controlling prices. The price is set by what the consumer is willing to
>>> pay.
>>
>> Yes, it rewards the dealers by rationing the goods which increases their
>> price and dealer profit should the dealer do so. If the cars were not
>> rationed, the dealers that sold at MSRP would drive down the market
>> price. But since they are rationed, the MSRP selling dealerships run
>> through their allotments quickly allowing the others to add 20K to the
>> sticker.

> And this is how ford chooses to operate... IN A FREE MARKET!!! Ford is
> not THE market. It is a competitor in the market place.

Walmart, Kmart, and Target sell the same products. All these products
have various list prices (MSRPs). In a free market they compete with each
other. Why shouldn't BillyBob's Ford vs. dingleville Ford vs. Shelbyville
AutoMall compete with each other?

>>> You are applying the free market definition to a very specific company
>>> and a very narrow circumstance.

>> Let's see, you and others are telling me it's the free market and I
>> should love it. It's not a free market situation. It's a rationing
>> situation.

> Your first clue that you are wrong is in your above statement. We are
> all wrong and you are right?

We being you and the voices in your head?

> Is rationing your new buzz word? What was wrong with allotment?

Because when I used allotment you couldn't figure it out. So I used a
term closer to the economic model being followed.

> Do you expect Ford to market the GT500 like it does an F150?

If they want to maximize profits.

>>> You are not obliged to buy a GT500.

>> I haven't stated otherwise and I am growing quite tired at this continual
>> sidetrack of yours. That doesn't change the fact that the additional
>> profit dealers are tacking on does not come from a free market situation.

> You say there is no free market and I have thoroughly explained that
> there is.

You haven't shown anything of the sort.

> What is the side track?

The sidetrack is your insulting crap about not knowing I could choose a
non-ford product.

> You do realize Ford operates in a
> free market here and has many competitors for all their makes and
> models?

You're not grasping it and are choosing to be insulting rather than
figure it out. Another example: Circuit City and Best Buy compete
selling Sony TVs. Sure you chould choose to buy one made by Sharp, but
these retailers still compete to sell Sonys.

That's why the GT500 isn't a free market, but one with rationing
(allotment). Billybob Ford isn't competing with Shelbyville AutoMall
because of the rationing.

> You think Toyota doesn't maximize profits too. I know the
> owner of three Toyota dealerships personally and I can confirm that he
> does. They all do it and it is done in a free market. No one dealer or
> automaker is the free market on there own. I just don't see what is so
> difficult in grasping this concept.

Toyota dealers don't compete with each other? If dealers aren't to
compete with each other they should become owned by the manufacturer.

>>> You have the ability to choose a Corvette, Mercedes, BMW or any other
>>> car you choose as a substitute if you aren't willing to pay a dealer's
>>> price.

>> And that's likely what will happen.

> You realize you are part of the free market at work, don't you?

But it isn't your ideal free market setting the price of GT500s, because
BMW and Chevy dealers will be competing with each other to sell the cars
of interest they are selling. Meanwhile, Ford is playing allotments.

>>> This is the free market, or supply and demand, forces at play
>>> that really sets the price of a GT500.

>> But there is no free market between _independently owned_ Ford dealers.

> And Ford and its dealers don't constitute a free market on their own.
> They are one part of the overall free market system.

Dealerships are independently owned businesses. They compete with each
other the same way Walmart and Target compete with each other selling
colgate toothpaste and whole host of other identical products.

Your argument above would only make sense if they were owned by Ford.

>>> You need to take off your
>>> blinders and see the entire playing field.

>> I see the whole field thank you very much. Could you please stop
>> constructing this strawman?

> Straw man? What are you talking about now? Every time you get boxed
> into a corner you play the "straw man" card.

The strawman being that I am not seeing the entire field. You keep
harping on this and knocking it down and I am rather sick of it.

> The only straw man here is
> you claiming Ford and its dealers can, and should, operate as a free
> market internally.

Have I stated that? I stated that they aren't operating as a free market
with the _independently owned_ dealers. The dealerships are not internal
to ford. They are not owned by ford. They are independent businesses and
are free to stop selling fords and/or start selling chevys or Ladas or
toyotas or whatever they want to.

I've seen some interesting dealerships... like a Chevy and Mazda
dealership. Same company sold Chevys and they sold Mazdas on the same
property with the same salesmen. That's just like Best Buy selling Sony
and Sharp TVs in the same isle. Dealers are _RETAILERS_ They are not
owned or operated by the manufacturer. Manufacturers try to control
retailers as I am sure you'll be quick to point out, have little control
over dealer pricing.

Because the supply of product is not following free market principles,
the retailers can charge more for it due to the artifical scaricity
created by not following a free market system but rather using a
rationing system.

>>> Then you might see how
>>> supply and demand, along with the dealer's, and Ford's, right to
>>> maximize profits is determining the price of the GT500. This isn't a
>>> rare case. It happens with nearly every item we purchase.

>> Ford isn't maximizing anything but their losses. MSRP is where _FORD_
>> thinks it will _MAXIMIZE_ it's profits. If Ford thought that maximium
>> profits were at $65K, that's what MSRP would be.

> You are once again assuming to know way more than you actually do.
> Neither of us know what combination of sales price and volume will
> maximize profits. I doubt Ford even knows it until the dust settles.

I didn't assume anything. MSRP is where the manufacture _THINKS_ maximium
profit point is. It's clear you aren't reading what I write at all, but
skimming a few words and inserting what you wished I had written instead.

> Ford has decided to sell X number of cars to the dealers for Y price.
> They can compute their profits based on these numbers. The dealers are
> now trying to maximize their profits by probing the market place with
> prices they think will fly based on the current demand. MSRP means
> nothing to a dealer right now for the GT500. It is what Ford has stated
> is their belief of the car's market value. This isn't based on the
> initial demand but over the entire year's production and anticipated
> total demand for the car.

> You make Ford out to be some evil corporation
> ripping off its customers when they are just like every other auto
> maker.

I haven't done any such thing. Here you go again making up strawmen.

> I guess a reasonable profit is OK as long as it meets your idea
> of reasonable?

Made no such argument. Why don't you go **** yourself? Seriously, I grow
tired of this continual line of **** from you. You just make up one thing
after another to force me to deal with these stupid tangents.

>> Then again look who I am discussing this with, someone who thinks highest
>> unit price is always maximum profit. It's not.

> There you go again, assuming you know way more than you actually do.
> Where in this thread have I stated what you just claimed?

You've stated that clearly several times.

> I took enough
> economics courses in college to know the relationship between price,
> product quantity, demand and profit.

Then act like it.

> Plus I have owned two businesses
> selling goods and services in a competitive market so I know a little
> about their combined effect on profits.

You've sounded like some who feels happy screwing customers so long as they
don't realize it right away because that's maximum profit per unit.

> BTW, I was looking forward to your rationalization of how you maximizing
> your income shouldn't be considered an act of greed on your part. I
> thought it might give me some insight regarding why you think dealers
> are greedy for maximizing their profits and you, OTOH, are not when
> maximizing your income.

I'm sorry, I am not falling for your side distractions and easy to
knock down strawmen. The fact remains, GT500 pricing is _NOT_ the result
of a free market situation of supply. It's a result of rationed supply.

If my 'raise' is too much, free market allows them to hire another
engineer and fire me. There isn't an allotment of engineers to chicago,
they can encourage someone from WI or even China to come in and work for
less. Now if there were an allotment of engineers for the Chicago area,
my price would skyrocket because there would likely be too few of us
here, but too many in Montana. But that wouldn't be a free market, now
would it?

For instance, say that lumber is needed more in one area of the country.
Lumber prices there will increase and product will be diverted to that
area as lumber mills try to maximize their profits by diverting from
other regional markets. This would stablize and bring down prices in the
region of high demand. But lets say lumber mills stayed true to a
distribution scheme and that area got what they were set to get and not
a bit more. Prices would sky rocket for lumber in that area of the
nation. Going higher and higher and not stablizing because product isn't
being sent to try and satisify demand. That's what happens under
allotment/rationing schemes. This ration, not a bit more or less. Lumber
sits unsold in Chicago but meanwhile in New Orleans housing repair costs
skyrocket for a lack of lumber. That's how allotment markets work, sky
high prices where the allotment isn't enough. Sure, lumber dealers in New
Orleans maximize their profit per unit, but are they really maximizing
their overall profit? How about the mills?

Now exactly how is Ford delivering more GT500s to meet demand and
maximize it's profits? It's not. It's sticking to an allotment scheme and
prices are skyrocketing at the retailer. It's the direct opposite of a free
market where Ford would be encouraged to build more and deliver them to
where they are selling. It's system of rewarding dealerships is causing
it to act _NOT_ to maximize it's profits.