Comments on: The great Apple Aussie rip-off? http://www.26econ.com/the-great-apple-aussie-rip-off/ Online economics Mon, 08 Sep 2008 16:22:19 +0000 http://wordpress.org/?v=2.3.2 By: Juan http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2710 Juan Sun, 27 Jan 2008 16:14:56 +0000 http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2710 Thinking it over, perhaps is simpler than that. Exchange rate fluctuations do affect relative prices but European and Australian are used to pay for Apple products more or less what they are still paying (in ther local currency). Apple is not going to low its prices just because european and australian custumers have now easier access to prices at the U.S. online store and to the current exchange rate. Perhaps -as they manofacture in China- the weak dollar isn't causing Apple to have higher margins in Europe and Australia but lower margins in the U.S. Thinking it over, perhaps is simpler than that. Exchange rate fluctuations do affect relative prices but European and Australian are used to pay for Apple products more or less what they are still paying (in ther local currency). Apple is not going to low its prices just because european and australian custumers have now easier access to prices at the U.S. online store and to the current exchange rate. Perhaps -as they manofacture in China- the weak dollar isn’t causing Apple to have higher margins in Europe and Australia but lower margins in the U.S.

]]> By: aaron http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2685 aaron Thu, 24 Jan 2008 23:16:12 +0000 http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2685 Matt: Good points. I'm not sure if I believe the story about economies of scale. Most of Australia's population is concentrated in a few cities. Aside from demand and costs, the other thing that determines prices is the intensity of competition. To me this looks like the prime suspect. I'm not saying that Apple is behaving anti-competitively, but just that they are pricing in response to the intensity of competition that they face in the Aussie market. Of course I have no evidence to back this up though, it's just a theory. Matt: Good points. I’m not sure if I believe the story about economies of scale. Most of Australia’s population is concentrated in a few cities. Aside from demand and costs, the other thing that determines prices is the intensity of competition. To me this looks like the prime suspect. I’m not saying that Apple is behaving anti-competitively, but just that they are pricing in response to the intensity of competition that they face in the Aussie market. Of course I have no evidence to back this up though, it’s just a theory.

]]> By: Matt Nolan http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2684 Matt Nolan Thu, 24 Jan 2008 19:11:50 +0000 http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2684 "Europe suffers the same abuse from Apple." I'm not sure that I would term an equilibrium price abuse - after all they are not forcing you to buy the product. If the price is higher in Australia and Europe it must be because of some of the fundamentals of the market. Now for the Australia example the demand side has been ruled out "I don’t believe that Australians have significantly higher willingness to pay for Apple products on average compared to Americans", which leaves us with possible supply side reasoning. I would say that since Australia provides a much smaller market for Apple products than America, implying that it does not receive the possible economies of scale that are avaliable in the US. This might mean that it is more expensive to distribute products around Australia, because the networks are not as well established. As you say, it seems relatively cheaper to buy the product online in the US and get it shipped here. This implies that there must also be some demand side reasons. In this sense part of the price differential is to do with any transaction costs from buying online compared to buying at the store (eg the waiting time), and another part of the difference is to do with imperfect information (people may not realise how much cheaper it is now that the US dollar is weak). “Europe suffers the same abuse from Apple.”

I’m not sure that I would term an equilibrium price abuse - after all they are not forcing you to buy the product. If the price is higher in Australia and Europe it must be because of some of the fundamentals of the market.

Now for the Australia example the demand side has been ruled out “I don’t believe that Australians have significantly higher willingness to pay for Apple products on average compared to Americans”, which leaves us with possible supply side reasoning. I would say that since Australia provides a much smaller market for Apple products than America, implying that it does not receive the possible economies of scale that are avaliable in the US. This might mean that it is more expensive to distribute products around Australia, because the networks are not as well established.

As you say, it seems relatively cheaper to buy the product online in the US and get it shipped here. This implies that there must also be some demand side reasons.

In this sense part of the price differential is to do with any transaction costs from buying online compared to buying at the store (eg the waiting time), and another part of the difference is to do with imperfect information (people may not realise how much cheaper it is now that the US dollar is weak).

]]> By: Juan http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2676 Juan Tue, 22 Jan 2008 16:25:14 +0000 http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2676 Slight mistake. In fact US Macbook Pro price is 1999 dollars. Still this would be 1367 euros. Far from de 1849 euros it does cost in Spain! We are ripped-off just as aussies or more! Slight mistake. In fact US Macbook Pro price is 1999 dollars. Still this would be 1367 euros. Far from de 1849 euros it does cost in Spain!
We are ripped-off just as aussies or more!

]]> By: Juan http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2673 Juan Tue, 22 Jan 2008 11:20:53 +0000 http://www.26econ.com/the-great-apple-aussie-rip-off/#comment-2673 Europe suffers the same abuse from Apple. A Macbook Pro costs 1899 dollars in the U.S. which means 1308 euros at at today's exchange rate. But the real cost in Europe is 1849 €. There's a loss of 500 euros (750 dollars) for europeans (profit for Apple. Europe suffers the same abuse from Apple.
A Macbook Pro costs 1899 dollars in the U.S. which means 1308 euros at at today’s exchange rate. But the real cost in Europe is 1849 €.
There’s a loss of 500 euros (750 dollars) for europeans (profit for Apple.

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