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Because they can

Summary:
The Times gives us some calculations about the price of goods from Apple. Those in the UK are rather higher than those in the US. It appears necessary to tell people why this is so:Martyn James, consumer expert with Resolver, the complaint handling website, said: “I can’t find one justifiable reason for these differences. The goods are likely to be made in the same country so this shouldn’t have an impact on price. It looks like profiteering.”Well, we can tell you why this is. Because they can.Producers of anything will charge what they think they can get away with. This is as true of the labourer supplying their time as the capitalist corporation providing electronics. People are greedy and also lazy - not in pure senses, but in that they’d prefer to get more for having had to put in

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The Times gives us some calculations about the price of goods from Apple. Those in the UK are rather higher than those in the US. It appears necessary to tell people why this is so:

Martyn James, consumer expert with Resolver, the complaint handling website, said: “I can’t find one justifiable reason for these differences. The goods are likely to be made in the same country so this shouldn’t have an impact on price. It looks like profiteering.”

Well, we can tell you why this is.

Because they can.

Producers of anything will charge what they think they can get away with. This is as true of the labourer supplying their time as the capitalist corporation providing electronics. People are greedy and also lazy - not in pure senses, but in that they’d prefer to get more for having had to put in less.

So, if it’s possible to charge a higher price then so they will. The reason for higher UK prices is because it’s possible to charge higher prices in the UK.

In more general terms what limits this ability is competition. That’s the great moderator of the ability of producers to raise their prices. This is why closed shops were so popular among the workers who were members of them, it enabled competition to be reduced and prices to be raised. So too cartels among companies. Competition being, again, the thing that limits said power.

Apple charges higher prices in the UK than it does in America. Why? Because there is less competition in the UK economy than the American. Once the problem is properly understood the solution becomes obvious - increase the competition here, allow more of it, and the prices will equalise, won’t they?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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