[Jedster]

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My point is simply that MSFT is manipulating markets to its benefit.

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Manipulating?

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Not producing enough product to meet supply while promoting an artificially low price point in order to drive demand way up. It's obvious consumer psychology. I don't have any problems with the practice (other than I wish I had my Xbox360 now). I certainly don't think there should be any regulation of the practice. But they are doing it.

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Note that their ability to mandate price controls among retailers is one of the things that is creating this whacky secondary market.

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I still don't see a problem. Should they not be able to set the terms of sale for their own product?

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Actually, I don't think that wholesalers should be able to control retail channel pricing. That does get in the way of a functioning free market. I believe that at some level this is actually illegal but that they get around it by offering promotions and incentives that are unavailable to retailers who sell below the MSRP. For example, it's legal to sell xbox at a premium on ebay, even though MSFT could cut the balls off a Best Buy for selling it a different price. I think that gives MSFT too much power.

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Also, if you look at past MSFT practices, you'll see some practices which got in the way of a well-functioning free market.

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What do past practices have to do with Xbox360 "manipulation"?

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None. Just shows a pattern.

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Another way of putting it: it is fair to be skeptical of corporate power AND to be skeptical of government power. It's not like you have to choose one over the other, for now and eternity.

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I'm skeptical of all sorts of power. I just don't see any abuse here. Maybe there is some, but you haven't pointed to it.

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My only point is that it's irrational to believe that markets operate free of intervention or manipulation by producers. In many if not most cases, that manipulation does not cause significant harm to warrant any government intervention, but in some cases it does.

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In the particular XBOX case, I am not really pissed, other than that I really would have liked to play the new Madden 2006 yesterday at my house instead of at Best Buy. But the case illustrates a relatively harmless example of how companies manipulate markets.

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I'd like a Boxter for $100. Is Porsche "manipulating" the market by not selling me one on the terms I want?

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Absurd example. But Porsche certainly is setting the market by pricing high and reducing supply. No doubt if they wanted to they could lower prices by increasing supply and achieving some efficiencies. But that would hurt their brand identity and it isn't their strategy. I don't think they should be stopped from doing it by any governmental power.

But if you look at what some drug manufacturers, or insurance providers, or gas producers are doing, you have to wonder if they cross the line that Porsche and MSFT stay on the right side of.