Public goods question

[djsherin]

There have already been models for the pharmaceutical industry which state that such a result cannot be proven since it depends on the shape of the R&D production function as well as utility functions and the like.

“Show me.”

---

EIT, I’m curious to see this too.

[filc]

@EconomistInTraining

unwarranted assumption that pecuniary profit and welfare gains are always aligned.

How does profit arrive if not by delivering increased welfare or satisfaction to consumers?

[Snowflake]

Sorry to bring up this thread again.

I was speaking with my gym’s manager. He’s been successfully managing gyms since he was 20. We were talking about famous people he’s had in the gym. He mentioned he had an at the time famous wrestler who wanted to join because they are one of the only gyms in town geared towards bodybuilders. My manager charged him double the normal rate because he was famous and had money. The wrestler was more than happy to pay it, and they had a friendly relationship.

So firms can charge different prices to different customers. OP’s question assumes firms operate according to some “lemonade stand” routine of business practices.

I apologise, but Rothbard explains in this TLDR quote:

@Rothbard

Multiform pricing has been accorded a curious reception by economists and laymen. In some cases it is deemed vicious ex­ploitation of the consumers; in others (e.g., medicine and edu­cation) it is considered praiseworthy and humanitarian. In re­ality, it is neither. It is certainly not the rule in pricing that the most eager should pay in proportion to their eagerness (in prac­tice, usually gauged by their wealth), for then everyone would pay in proportion to his wealth for everything, and the entire monetary and economic system would break down; money would no longer function. (See chapter 12 below.) If this is clear in general, it is difficult to see a priori why specific goods should be singled out for this treatment. On the other hand, the con­sumers are not being “exploited” if there is multiformity. It is clear that the marginal and submarginal buyers are not exploited: the latter obviously gain. What of the supramarginal buyers who are receiving less consumer surplus? In some cases, they gain, because without the greater revenues provided by “price discrimi­nation” the good would not be supplied at all. Consider, for ex­ample, a country doctor who would leave the area if he had to subsist on the lower revenues provided by uniformity. And even if the good were still supplied, the fact that the supramarginal buyers continue to patronize the seller at all shows that they are content with the seemingly discriminatory arrangement. Other­wise, they would quickly boycott the seller, either individually or in concert, and patronize competitors. They would simply re­fuse to pay more than the submarginal buyers, and this would quickly induce the seller to lower his prices. The fact that they do not do so shows that they prefer multiformity to uniformity in the particular case. An example is private school education, which able but poor youths may often attend on scholarships—a principle that the wealthy parents who pay full tuition demon­strably do not consider unjust. If, however, the sellers have re­ceived grants of monopolistic privilege by the government, en­abling them to restrict competition in the serving of the supra­marginal buyers, then they may establish multiformity without enjoying the demonstrable preference of these buyers: for here governmental coercion has entered to inhibit the free expression of preferences.[92]