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Upholding the first sale doctrineUpholding the first sale doctrinePosted Mar 21, 2013 21:40 UTC (Thu) by lacos (subscriber, #70616)In reply to: Upholding the first sale doctrine by jezuch Parent article: Upholding the first sale doctrine
Market segmentation is important when dealing with "inequalities over the world". (Please excuse the grandiosite words.) CD's are one example, but what about pharmaceutical drugs?
Suppose you're big pharma and research, develop, and sell meds. If you keep one price all over the world, you'll be billed a usurper of human suffering in poor countries. So you lower the prices there (practicing charity), while recovering your costs and making a profit in rich markets. Now suppose someone reimports the cheap drugs, basically punishing you for your charity and endangering your drug research. What's the answer if not market segmentation?
CD distributors just don't care, and rightfully so. Music (especially pop music) is not critical for your well-being; they're not morally obligated to help you in your desire for entertainment / culture.
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Upholding the first sale doctrine Posted Mar 21, 2013 21:42 UTC (Thu) by lacos (subscriber, #70616) [Link]
"grandiosite words" --> botched attempt to turn "grandiosity" into "grandiose words". Sorry.
Upholding the first sale doctrine Posted Mar 21, 2013 21:58 UTC (Thu) by wahern (subscriber, #37304) [Link]
Market segmentation isn't charity, it's just maximizing profits. Every company attempts to segment their market six ways from Sunday, because it usually allows you generate more profits by arbitraging differences in price elasticity. Another term for market segmentation is price discrimination.
All these concepts are fundamentally neutral in terms of being harmful or beneficial. So don't pull on my heart strings in an attempt to feel bad when trade barriers are taken down.
If poor countries need help acquiring pharmaceuticals, they can come ask me or my political representatives directly. If somebody is on the cusp of curing cancer, but can't afford the trials because their Viagra slush fund was raided by stock holders, they can come ask me or my political representatives.
If you try to address these issues with round-about trade machinations, in all likelihood you'll dramatically reduce overall social wealth.
Upholding the first sale doctrine Posted Mar 21, 2013 22:15 UTC (Thu) by lacos (subscriber, #70616) [Link] If poor countries need help acquiring pharmaceuticals, they can come ask me or my political representatives directlyAssuming (from your comment) that free trade has been established and the producer has been forced to set a common (high) price overall, how would the above work in practice? Thanks.
Upholding the first sale doctrine Posted Mar 21, 2013 22:29 UTC (Thu) by dlang (✭ supporter ✭, #313) [Link]
you (or your political representatives) help the poor country pay the costs.
Upholding the first sale doctrine Posted Mar 22, 2013 8:48 UTC (Fri) by lacos (subscriber, #70616) [Link]
It wouldn't prevent them (or a 3rd party merchant) from reimporting and reselling more cheaply. Perhaps the subsidized pharmaceuticals should only be sold to patients ("end users") in the target country, but that's again a trade barrier, only not between countries.
Upholding the first sale doctrine Posted Mar 22, 2013 18:55 UTC (Fri) by nix (subscriber, #2304) [Link]
... or you decide to eat the loss because the alternative is the poor country compulsorily licensing your patent and farming it out to a much cheaper generic manufacturer. Of course, a lot of patent treaty sorts *hate* this, but it's still there, and India and others have used it. It's amazing how fast the licensing fees demanded dropped when they did so.
Upholding the first sale doctrine Posted Mar 22, 2013 19:32 UTC (Fri) by raven667 (subscriber, #5198) [Link]
> So you lower the prices there (practicing charity), while recovering your costs and making a profit in rich markets.
I don't believe that any industry operates by selling product at a loss in poor countries to only make a profit in rich countries, in the examples of pharma or music the product is still being sold at a profit in the poor countries, it is just sold at a much higher profit in the rich ones. The rich countries are not subsidizing the poor, profit is instead made from both, according to their ability to pay. If a customer dosen't have ability to pay, they just don't receive the product. In the pharma industry this can be rather cruel.
Upholding the first sale doctrine Posted Mar 24, 2013 19:08 UTC (Sun) by Jonno (subscriber, #49613) [Link]
> The rich countries are not subsidizing the poor, profit is instead made from both, according to their ability to pay.
While this is always true with regards to manufacturing cost (also known as the marginal cost, e.g. the cost of making one more item), if you include a proportional part of the development cost, the price of the product in poor countries might in fact be "below cost".
Thus, the company makes a larger profit by selling their product in poor countries at a lower prise, compared to not selling at all in those countries, but that don't mean they would make a profit if all their sales were at that price. This is what makes price discrimination (and it's enforcement) an ethically difficult issue...
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