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0 pointsMichaelZuo3y ago0 comments

Competition from who? Every established, high trust, host will charge at least the minimum viable rate to break even.

Anyone who charges lower then the minimum viable will simply never break even, given that the money spent to accumulate trust has an opportunity cost.

The cheapest hotels will be priced about the same.

Low or zero trust hosts can't compete against high trust folks without a huge discount as already discussed.

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Dylan168073y ago

They will raise their prices until they are in the normal market range.

That's different from jacking up the price "to compensate" for the losses at the start. They just have to eat the initial costs, and it will take a while for normal market profits to put them in the black.

MichaelZuoOP3y ago

No, because money has a time value, the break even rate will be higher because a dollar today is worth more than a dollar a few months from now. It by definition will cause the rates to be higher then they otherwise would be. This might be worth paying for to be guaranteed a high trust host. But that doesn’t the change the fact that the costs are shifted around instead of being reduced overall.

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