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0 pointsISL5y ago0 comments

It does if McDonalds decides that it wishes to dump burgers. The ask price would fall to $0.

The market will correct very quickly, as competitors will immediately head over to McDonalds to purchase $\infty$ burgers at $0, killing MCD dead in seconds.

The moment McDonalds applies a purchase limit (Free burgers! Limit 5 per customer), the burgers have non-zero cost, as they require a person's time in order to purchase.

If McDonalds does have enough capital to buy long-term customers and kill off competition with free burgers, perhaps they should consider it. I assume that they've considered such a strategy on occasion and concluded that it isn't worth it. Burgers are probably worth more than $0 to McDonalds, too.

0 comments

jefftk5y ago

> If McDonalds does have enough capital to buy long-term customers and kill off competition with free burgers, perhaps they should consider it.

I'm pretty sure they should not consider it, because it is generally illegal.

https://en.wikipedia.org/wiki/Predatory_pricing

snowwrestler5y ago

Keeping in mind where this thread started... I'm not aware of a similar law that prohibits employers from overpaying their employees, though.

stale20025y ago

> I'm pretty sure they should not consider it, because it is generally illegal.

It is really not. At least in America. In America, where laws are based on consumer benefit, it is extremely difficult to prosecute companies for having too awesome of a service, that they give away for too good of a price, in a way that helps consumers too much.

It really just isn't something that gets prosecuted, except in absolutely exceptional circumstances.

ghaff5y ago

Leaving aside any skirting of regulations also involved, is the government going to prosecute Uber or Lyft because they're losing boatloads of money and therefore obviously priced too low?

1 more reply

ghaff5y ago

McDonald's (among many other places--especially those with many lower income customers) certainly do have loss leaders. I don't eat at McDonald's but I assume something like the $1 $2 $3 menu functions as something to get people in the door after which they or their friends may buy high-priced/margin items as well.

j / k navigate · click thread line to collapse

0 pointsISL5y ago0 comments

It does if McDonalds decides that it wishes to dump burgers. The ask price would fall to $0.

The market will correct very quickly, as competitors will immediately head over to McDonalds to purchase $\infty$ burgers at $0, killing MCD dead in seconds.

The moment McDonalds applies a purchase limit (Free burgers! Limit 5 per customer), the burgers have non-zero cost, as they require a person's time in order to purchase.

0 comments

jefftk5y ago

> If McDonalds does have enough capital to buy long-term customers and kill off competition with free burgers, perhaps they should consider it.

I'm pretty sure they should not consider it, because it is generally illegal.

https://en.wikipedia.org/wiki/Predatory_pricing

snowwrestler5y ago

Keeping in mind where this thread started... I'm not aware of a similar law that prohibits employers from overpaying their employees, though.

stale20025y ago

> I'm pretty sure they should not consider it, because it is generally illegal.

It really just isn't something that gets prosecuted, except in absolutely exceptional circumstances.

ghaff5y ago

Leaving aside any skirting of regulations also involved, is the government going to prosecute Uber or Lyft because they're losing boatloads of money and therefore obviously priced too low?

1 more reply

ghaff5y ago

j / k navigate · click thread line to collapse