Re: "They'll charge it to the customers"

Posted Jan 9, 2010 18:13 UTC (Sat) by giraffedata (guest, #1954)
In reply to: Re: "They'll charge it to the customers" by nix
Parent article: GSM encryption crack made public

Simply put, if it were possible for them to bring in more revenue by setting a higher price they would already have done so.

But it's not possible because we have laws to prevent an industry as a whole from setting a price of its own volition.

I know why you're responding this way. It's because when someone says a company will just pass on its costs to its customers, 99% of the time he doesn't understand economics and is wrong because he's talking about a product with high elasticity of demand -- for example a product of a single producer in a competitive market. However, in this case, I know a great deal about economics and was actually talking about a product with pretty high elasticity -- wireless phone service overall. The costs of having GSM not be encrypted affects all the providers.

Certainly, the statement, "If Sprint loses this lawsuit, it will just pass the cost of the judgment on to its customers" is wrong.

Re: "They'll charge it to the customers"

Posted Jan 9, 2010 18:20 UTC (Sat) by giraffedata (guest, #1954) [Link]

Whoops, I said phone service overall has pretty high elasticity of demand; I meant low. The demand is pretty inelastic. You can raise the price of phone service (from all providers) and a lot of people will still pay it.