You are not talking about the typical protectionist situation at all, which shields the home market from competition, thus increasing costs for internal consumers, and passes on discounts to the countries to which goods are exported.
It is true that a company will discount in many instances rather than lose market share. However, there is a limit to the notion of passing on costs, insofar as there will be backlash, either through private contract, or through governmental regulation, so one should not exaggerate how much one is subsidizing the discounts. It is not worth gaining a thousand customers at half- price if one loses 500 at full- price, so it is not necessary for the bulk of consumers to rebel, merely for one to sustain loses among the undiscounted of sufficient magnitude to make the proffer of discounts worthless.
Of course, one can point to the "third party" problem, but even insurance companies cannot afford to pay too much, or they will have to raise rates and will themselves lose customers. Why do you think HMOs and PPOs have become so popular? |
