High gas prices may be explained by self-organized cartel behavior

Jun 21, 2012 by Lisa Zyga feature
(Left) When buyers update their strategy at a fast rate relative to sellers, a product’s value (w) increases toward 1.0, resulting in low prices and a buyer’s market. (Right) When sellers update their strategy faster than a critical value, a product’s value fluctuates around values less than 1.0, resulting in high, fluctuating prices that benefit sellers. This cartel-like behavior emerges spontaneously based on the relative speeds with which buyers and sellers update their strategies. Image credit: Peixoto and Bornholdt. ©2012 American Physical Society

(Phys.org) -- Rapid increases and unpredictable fluctuations in gas prices annoy many drivers, especially since it may seem that oil companies are secretly conspiring to keep prices high by forming a cartel in an effort to increase their profits. But a new study shows that cartel-like price dynamics of certain commodities, such as gasoline, can emerge spontaneously in a strategic model without any collusion among the sellers. The finding doesn’t necessarily mean that companies don’t intentionally form cartels, but the possibility of self-organized cartel formation could have implications for market regulations.

The researchers, physicists Tiago P. Peixoto and Stefan Bornholdt of the University of Bremen in Bremen, Germany, have published their study, called “No Need for Conspiracy: Self-Organized Formation in a Modified Trust Game,” in a recent issue of Physical Review Letters.

“Our work shows that, under very reasonable and simple assumptions of the market dynamics, cartel-like behavior can emerge, without an explicit agreement between sellers,” Bornholdt told Phys.org. “This is, to our knowledge, completely new and we feel that it comes somewhat unexpected, for example in the context of German price discussions in the media. For example, a few months ago, the German governmental cartel agency searched the offices of large gasoline companies in search of evidence of cartel behavior. We asked ourselves if a cartel-like dynamics could emerge by itself, without leaving traces of evidence. As in Germany were – and still are – strongly fluctuating in time and space, this made us curious whether this could be a sign for an interesting collective dynamics, of gas sellers, interacting with each other in a funny way.”

The spontaneous emergence of cartel-like behavior appears in a model that the researchers developed, which is based on a real-life market scenario. The model involves one million agents, each of whom has the role of both buyer and seller of a necessary commodity, such as groceries or (for drivers) gasoline. As buyers, the agents must buy the product in question, but they can choose which seller they buy from. As sellers, the agents can set their price, knowing that too low of a price will not make them much , and too high of a price will drive buyers away to another seller.

As the game evolves, buyers and sellers continuously update their strategies: buyers change where they shop by comparing prices, and sellers raise or lower their prices by replicating the prices of other sellers who have higher profits.

The key variable in the game is who can update their strategy the fastest. If buyers can update their strategy at a fast rate relative to sellers, the model shows that the pricing favors the buyers. Since the sellers offering the lowest prices will profit most, other sellers will replicate these low prices until all sellers have the same low price.

But if sellers can update their strategy at a fast rate above a critical value compared to buyers, then the entire population of sellers benefits at the expense of all the buyers. This is because the sellers are quick enough to copy the high prices of more profitable sellers before the buyers have a chance to react. Soon, there are no low-priced options available, marking the emergence of a cartel-like phase.

“Our work shows that the deciding factor for whether a cartel can self-organize is the relative speed of buyers in comparison to sellers in updating their strategy,” Bornholdt said. “For consumers, price comparison websites and smartphone apps can be a potential means to react more quickly to price changes. If a global and real-time ranking of sellers is available, this could significantly thwart a cartel-like scenario. Note that the mere existence of such catalogs is not enough, it has to be used by a significant portion of the buyers; otherwise it has no effect, since a small number of buyers will not be able to benefit from it in the long run.”

Unlike the first scenario where prices settle at a stable low point, in the cartel-like scenario the model shows that the high prices fluctuate tremendously due to the ongoing competition among sellers, sometimes dipping down to reasonable prices. The price fluctuations are highest at relative strategy update rates close to the critical value, demonstrating typical critical behavior. When the sellers’ strategy update rate far exceeds the critical value, the price fluctuations diminish somewhat, but remain significant.

The model also shows another interesting feature of these price fluctuations: the average price often rises very quickly and decreases more slowly. This type of oscillation, called an Edgeworth price cycle, is often observed in real life and can be predicted by simple models when just two sellers are involved. In contrast, the model used here incorporates numerous sellers as well as the impact of buyer behavior, providing a more realistic system. Nevertheless, the researchers explain that using the model to predict future prices would be difficult, since the price cycle dynamics are aperiodic and not easily predictable.

However, the results could still be useful for market regulation, where regulators often discuss whether price fluctuations result from collusion among companies in an attempt to increase profit. If are just quick to individually update their pricing strategies, then high gas may simply be a natural result of the market. The researchers plan to improve the model in the future.

“The model can be made more realistic in a number of ways, in particular by implementing spatial constraints (a cheaper gas station which is 100 km away is not a viable option),” Bornholdt said. “Spatial constraints can sometimes significantly alter the dynamics in this type of system.”

Explore further: New approach to form non-equilibrium structures

More information: Tiago P. Peixoto and Stefan Bornholdt. “No Need for Conspiracy: Self-Organized Cartel Formation in a Modified Trust Game.” Physical Review Letters 108, 218702 (2012). DOI: 10.1103/PhysRevLett.108.218702

Journal reference: Physical Review Letters search and more info website

4.5 /5 (44 votes)

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R2Bacca
4 / 5 (4) Jun 21, 2012
Saved the biggest caveat for last. Well done.
ryggesogn2
2.1 / 5 (18) Jun 21, 2012
Does the model cover the EPA regulations that change the formulations by regions and times of the year?
TkClick
1.3 / 5 (8) Jun 21, 2012
Possibly relevant: Cartels are an emergent phenomenon. I'm somehow allergic to "emergent" concept because its mechanism is essentially undefined in the same way, like the behaviour of "parallel universe" and many other concepts, which are widely used in physics today. The mechanism of cartel formation is similar to traffic jam problem.
Telekinetic
1.6 / 5 (14) Jun 21, 2012
Exxon netted over nine billion dollars in a three month period in 2007. The practice is known as "gouging", and this is the kind of article they adore- "You see, it's market forces that are out of our control." Fat liars! It costs two or three dollars per barrel to extract the oil out of the ground, and after that, it's a free-for-all in mark-ups. Any other industry or commodity would be shut down for the same violations, but thanks to oil industry lobbying of our pristine House and Senate, they can charge whatever they please.
Telekinetic
1.2 / 5 (10) Jun 21, 2012
"...its mechanism is essentially undefined in the same way, like the behaviour of "parallel universe" and many other concepts, which are widely used in physics today." - TkClick
The concept of parallel universe(s) is NOT widely accepted in physics, but is gaining ground. Eastern Europe was the source of great strides in chemistry and physics, but research was also suppressed in the satellites of the Soviet era. You need to break free of that for your own personal evolution as a scientist.
sigfpe
4.2 / 5 (6) Jun 21, 2012
Telekinetic,

> Any other industry or commodity would be shut down for the same violations

If there isn't a monopoly, and there isn't collusion, then in the US sellers are generally free to sell commodities at whatever price they like without being shut down and without having to lobby the House and Senate.
freethinking
2.6 / 5 (20) Jun 21, 2012
How about the impact of progressive government/environmentalist types baning the construction of new refineries? How about progressive government/environmentalists types baning the drilling for oil in the US? How about other crazy regulations by progressives? It would be funny if it wasn't so crazy, that progressives who CAUSE prices to go up, then complain about high prices!
ryggesogn2
2.8 / 5 (18) Jun 21, 2012
How many independent gasoline retailers are there in Germany?
Exxon netted over nine billion dollars in a three month period in 2007.

What were their sales? What was their profit RATE?
How much did the govt collect in taxes on those sales?
I'm somehow allergic to "emergent" concept

Most socialists are.
tpb
3 / 5 (4) Jun 21, 2012
Sigfpe,
But, there is a monoply/cartel (OPEC) which controls production and world prices.
Our companies sell on the world market and base their prices on the world market, not on cost of production.
Telekinetic
2.1 / 5 (14) Jun 21, 2012
"Still, it paled in comparison to the $175 million spent by the oil and gas industry, which opposed the pollution caps that would be required in a bill by Sens. John Kerry, D-Mass. and Joe Lieberman, I-Conn. ExxonMobil alone spent $27.4 million."- USA Today (2010)
And there IS collusion- between the oil companies and the corrupt lawmakers that Americans have put their trust in.
Telekinetic
1.9 / 5 (20) Jun 21, 2012
How about the impact of progressive government/environmentalist types baning the construction of new refineries? How about progressive government/environmentalists types baning the drilling for oil in the US? How about other crazy regulations by progressives? It would be funny if it wasn't so crazy, that progressives who CAUSE prices to go up, then complain about high prices!
-freethinking

We progressives also believe in education for all, so that everyone will know how to spell "banning" correctly.
Vendicar_Decarian
2.3 / 5 (12) Jun 21, 2012
Cartel behavior is emergent as all members of the supply chain set their prices relative to the prices of their competitors.

This self organizing behavior is a feature of all real markets.

"Does the model cover the EPA regulations that change the formulations.." - RyggTard

One wonders why RyggTard feels a need to respond when he clearly can't even begin to comprehend the content of the article.
Vendicar_Decarian
1.9 / 5 (13) Jun 21, 2012
Sorry. But that doesn't cause the formation of Natural Cartels either.

You should learn how to read. It is a valuable skill.

"How about the impact of progressive government/environmentalist types baning the construction of new refineries?" - FreeTard

Vendicar_Decarian
2.5 / 5 (11) Jun 21, 2012
None of which is relevant to the natural formation of cartel behavior in free markets.

"What were their sales? What was their profit RATE?
How much did the govt collect in taxes on those sales?" - RyggTard

Poor RyggTard. He needs to defend his failed free-market ideology from every reality. It is clearly a full time job for him.
Vendicar_Decarian
2.2 / 5 (14) Jun 21, 2012
While Economists have decided that it is moral and proper for Corporations to steal as much money from the consumer as possible, some feel that it is wrong for elected politicians to assist them in doing so.

Why are the American people voting for people who are assisting the Corporations in stealing their money?

Is it a case of mass insanity? Or are the American people just becoming dumber and dumber with each passing day, and are no longer capable of governing themselves?

"And there IS collusion- between the oil companies and the corrupt lawmakers that Americans have put their trust in." - Telekenetic
freethinking
2.4 / 5 (19) Jun 21, 2012
While I admit I have problems with spelling and gramar, VD and most progressives have problems with definitions, and logic.

VD Please name the Economists who have said it is moral and proper for corporations to steal?

I agree Americans are easy to fool, they voted for Obama didn't they, but they do wise up after a while. Now that they have seen what radical progressive looks like and have seen their hate and distructive ways, and no longer believe their lies, they are swinging back to sanity. November will be the proof of that!
Vendicar_Decarian
2.5 / 5 (13) Jun 21, 2012
Which of course is why the vast majority of scientists are progressives, and why the University system has been referred to as "a bastion of Liberalism".

"While I admit I have problems with spelling and gramar, VD and most progressives have problems with definitions, and logic." - FreeTard

There is no cure for the ignorance of Conservatism. Death is the only release Conservatives have from their lives of ignorant bluster and intellectual self mutilation.
Telekinetic
1.8 / 5 (15) Jun 21, 2012
Freethinking-

It's spelled "grammar" and "destructive". If you want to be taken seriously and not be thought of as a fifth grade dropout, take some remedial reading classes, otherwise whatever you write I tend to dismiss out of hand.
Vendicar_Decarian
2.8 / 5 (11) Jun 21, 2012
"VD Please name the Economists who have said it is moral and proper for corporations to steal?" - FreeTard

Hayak, Mises, the usual Libertarian Vermin.
Vendicar_Decarian
2.7 / 5 (12) Jun 21, 2012
His comprehension of science is no better.

"If you want to be taken seriously and not be thought of as a fifth grade dropout, take some remedial reading classes" - telekinetic

Grade 5 education and he has already moved to planet Conservadopia.
Vendicar_Decarian
2.6 / 5 (10) Jun 21, 2012
http://0.tqn.com/d/politicalhumor/1/7/J/7/4/fox-news-tina-fey-palin.jpg

Faux News confuses Tina Fey for Sarah Palin.

PropaTainment at it's best.
Job001
2.8 / 5 (11) Jun 21, 2012
Similar to ticket scalping from the view of artificial scarcity. Buy everything driving up the price then Dutch auction the market. Most markets are experiencing contrived artificial scarcity. The low volume/speed buyer can't compete with the high volume/speed buyer/seller.
krundoloss
2.6 / 5 (7) Jun 21, 2012
Sigfpe,
But, there is a monoply/cartel (OPEC) which controls production and world prices.
Our companies sell on the world market and base their prices on the world market, not on cost of production.


Thats exactly right. In a normal market, lets say, sunglasses, someone says "Hey I can make sunglasses for cheaper than everyone else, and Im willing to take a smaller profit on a larger scale so I will sell them for cheap." Meanwhile, the oil companies say "I can produce/extract this oil for a certain amount, I can store large quantities of it, and I can charge the same or slightly less than everyone else and make lots of money. Why would I sell it for less?" The oil companies prices are based on the world market, but they set their prices to take full advantage of any situation. A prime example is when Hurricane Katrina hit the Gulf of Mexico, and within 24 hours gas prices went up all over the place. Was the supply affected immediately? No. But their prices are set by the market
Telekinetic
1.8 / 5 (12) Jun 21, 2012
" A prime example is when Hurricane Katrina hit the Gulf of Mexico, and within 24 hours gas prices went up all over the place. Was the supply affected immediately? No. But their prices are set by the market"-Krundoloss
In this instance it is considered "price gouging", when a necessary commodity is inflated during an emergency and is ILLEGAL. Oil companies and distributors should have been prosecuted, but their buddy, George W., an oilman himself, did absolutely nothing. Know your history before using it to bolster your argument.
freethinking
2.6 / 5 (15) Jun 21, 2012
Social "scientists" are very progressive. Practical scientists and engineering types are typically conservative.

For the progressives that have problems with my spelling, I hate to let you know but your not important enough for me to spend much time spell checking for you. I run two successful businesses.

That said however, Einstein and I have at least two things in common. 1. both of us are poor spellers, and both of us cant remember phone numbers. So if VD wants to suggest poor spelling makes one stupid, then I'm in good company with Einstein.

At least I'm not like VD who sits in his parents basement spell checking every word he types, between his mom yelling at him to clean up his room, trying to make himself look smart.
krundoloss
1 / 5 (3) Jun 21, 2012
" A prime example is when Hurricane Katrina hit the Gulf of Mexico, and within 24 hours gas prices went up all over the place. Was the supply affected immediately? No. But their prices are set by the market"-Krundoloss
In this instance it is considered "price gouging", when a necessary commodity is inflated during an emergency and is ILLEGAL. Oil companies and distributors should have been prosecuted, but their buddy, George W., an oilman himself, did absolutely nothing. Know your history before using it to bolster your argument.


Dude, you are agreeing with me. I think its price-gouging too, there just nothing to stop them. That was my point.
Vendicar_Decarian
3.9 / 5 (7) Jun 21, 2012
"Most markets are experiencing contrived artificial scarcity." - Job001

Creating artificial scarcity is now the primary tactic of Industry. It is accomplished though a variety of methods, but the most insideus is through the creation of alternate brands specifically to fragment the market, produce false choice, and to allow the industry to either charge higher prices for replacement parts or design their products specifically to fail and in a manner that can not be serviced, in order to foster future sales.

What is sold as "innovation" is more and more commonly just a rehash of features from earlier models that consumers have long forgotten about.

This is how the modern corporate farmer controls the consumption of his livestock.
Vendicar_Decarian
3.4 / 5 (5) Jun 21, 2012
A perfect example of Corporate theft excused by conservative Uncle Tom's.

"A prime example is when Hurricane Katrina hit the Gulf of Mexico, and within 24 hours gas prices went up all over the place." - KrundoTard

ryggesogn2
2.2 / 5 (10) Jun 21, 2012
In this instance it is considered "price gouging", when a necessary commodity is inflated

This is not gouging.
Such pricing is the best way to ration necessary commodities.
If there were a shortage of bottled water in NO, which their was, companies like Wal Mart DONATED time and water for relief.
But, if a bottle of water was $10, how many companies and entrepreneurs would be shipping has much water as they could at that price? And with such an influx of supply, the prices would quickly drop.
From the consumer side, such price increases would signal they should conserve and not waste such a costly resource.
Gouging laws make socialists feel good and prolong the shortages of valuable commodities.
Telekinetic
1.5 / 5 (8) Jun 21, 2012
"The owners of 18 Illinois gas stations face a decision on Thursday: Admit to illegally raising prices at the pump after Hurricane Katrina and make a $1,000 donation to charity, or declare their innocence and face the possibility of even bigger expenses in the form of a state lawsuit.
Illinois Attorney General Lisa Madigan last month sent letters to 18 gas stations informing them that they could avoid being sued for alleged violation of consumer protection laws by donating $1,000 to the American Red Cross and signing an assurance of voluntary compliance -- essentially an admission of price gouging."- ABC News 1/4/2005
krundoloss
1.7 / 5 (6) Jun 21, 2012
A perfect example of Corporate theft excused by conservative Uncle Tom's.

"A prime example is when Hurricane Katrina hit the Gulf of Mexico, and within 24 hours gas prices went up all over the place." - KrundoTard

I am not excusing it, i think it is intrinsically wrong. Prices should only go up when supply has truly been affected, not when the supply drop is speculative and has not yet occurred. I despise the oil companies, i would never excuse them. No other enitity is driven by greed more than these companies. How much technology has been buried, bought or snuffed out so they can keep thier strangle hold on the world!

ryggesogn2
2.2 / 5 (10) Jun 21, 2012
"The owners of 18 Illinois gas stations face a decision on Thursday: Admit to illegally raising prices at the pump after Hurricane Katrina and make a $1,000 donation to charity, or declare their innocence and face the possibility of even bigger expenses in the form of a state lawsuit.
Illinois Attorney General Lisa Madigan last month sent letters to 18 gas stations informing them that they could avoid being sued for alleged violation of consumer protection laws by donating $1,000 to the American Red Cross and signing an assurance of voluntary compliance -- essentially an admission of price gouging."- ABC News 1/4/2005

Sounds like socialist blackmail. Typical.
ryggesogn2
2.2 / 5 (10) Jun 21, 2012
"In its investigation, the FTC found no instances of illegal market manipulation that led to higher prices during the relevant time periods "
"the post-hurricane gasoline price increases at the national and regional levels were approximately what would be predicted by the standard supply-and-demand model of a market performing competitively. "
http://www.ftc.go...ces.shtm
Vendicar_Decarian
3.7 / 5 (6) Jun 21, 2012
And when manufacturers produce artificial scarcity though limited manufacture?

"Prices should only go up when supply has truly been affected" - Krundo

I produce battery operated drills who's design has not changed in the last 30 years.

Why would I not produce a single model drill with replaceable bearings and fittings rather than produce a similar drill that is designed to fail after 4 years?

Why would I change battery compartment shapes every 4 years rather than use a common shape and charger for all drills of the same voltage?

Answer: Planned Obsolescence as a means of producing artificial shortage.
ryggesogn2
1.8 / 5 (10) Jun 21, 2012
ExxonMobile profit margin: 9%
http://finance.ya...ks?s=xom
Apple: 27%
GE: 9.8%
Osiris1
1 / 5 (3) Jun 21, 2012
This study had strong similarities to the 'Condon Report' that ex president Nixon tried to sell the nation back in 1968. It was later learned that the scholars that put this together worked to a pre-arranged quid-pro-quo conclusion. Stacking chosen 'evidence' and using every sleazy debate trick of rigged debating that would have made their boss, Tricky Dikky Nixon and their mentor, Joseph Goebbels the old nazi propagandist proud of them, these prostitute professors 'delivered the pizza' exactly the way the republicans wanted. And so it is with gas prices. This is just another devious attempt to convince Joe Lunchmeat that the monopolies are 'not at fault' for raising prices suddenly just before holidays, and dropping prices steeply just before national elections with oil monopolist interests at stake...like making sure their paid in the shade stooges slime back in on the cemetery vote in low turnout voter suppressed elections.
Vendicar_Decarian
3.4 / 5 (5) Jun 22, 2012
RyggTard covers up something very smelly.

"ExxonMobile profit margin: 9%" - Ryggtard

Exxon reports it's profit margin at 9.00% So it is 9% to within less than a factor of 1% from the exact integer value.

Which of course is exceedingly improbable. You would expect such a thing only once every 200 years on average.

And amazingly it is the year that Libertarian RyggTard Reports.

Vendicar_Decarian
4 / 5 (4) Jun 22, 2012
EXXON MOBIL CORP (NYSE:XOM
Gross Profit Margin - 33.6%
ROE from Total Operations 25.4%

http://finapps.fo...?tkr=xom
88HUX88
not rated yet Jun 22, 2012
buy smaller more economical cars, drive less and fly less
higher oil prices will encourage this behaviour, and the price isn't going down is it?
ryggesogn2
1 / 5 (6) Jun 22, 2012
buy smaller more economical cars, drive less and fly less
higher oil prices will encourage this behaviour, and the price isn't going down is it?

Depends upon if price is based upon the market or govt taxes and regulations.
tatiana_covington_7
1.8 / 5 (5) Jun 22, 2012
It's all just plain old PROFIT MOTIVE!!!!

Kah-ching!
krundoloss
2 / 5 (4) Jun 22, 2012
So the consensus seems to be that: oil companies behave the way they do because they can and they make more money doing what they currently do. We all agree that this is a normal way for a commodity market to operate, but that it seems unfair to the consumer. Yes economics dictate that when a resource is scarce, high prices reduce shortages. But when we have reserves......a price increase should not be necessary. It all boils down to military readiness. If we are cut off from OPEC, we can continue to operate internally off our reserves. Who pays the price? Everyone, but atleast our (USA) imperialist government will have reserves if its is ever needed. But what do I know, Im just computer tech....
ryggesogn2
1.8 / 5 (10) Jun 22, 2012
Yes economics dictate that when a resource is scarce, high prices reduce shortages. But when we have reserves......

...that politicians ban the production of to cause artificial scarcity to satisfy a political agenda is dictatorial economics, aka socialism.
Burnerjack
5 / 5 (3) Jun 22, 2012
I'm no economist, but it seems to me, they charge whatever they think the economy can support. If they err on the conservative side, the results are missed profits. If they err on the aggressive side, demand destruction ensues. People will do without, seek alternatives etc. I laugh when the MSM reports consumption is down do to weak demand do economic slowdown. Truth is, when analysts report unemployment is up, discretionary spending is down, this indicates demand destruction is imminent.
No conspiracy required, they know what you, the collective public can support.
xen_uno
1.7 / 5 (6) Jun 22, 2012
I don't have a problem with the profit margins of the oil companies, but I do have a problem with high profits while taking in government subsidies.
k_m
1.7 / 5 (6) Jun 23, 2012
We progressives also believe in education for all, so that everyone will know how to spell "banning" correctly.

It appears you may have forgotten one grammar rule your "progressive education" should have taught you: ending a sentence with a prepositional phrase should not be done.
And speaking of the never-ending progressive education for all quest, progressives behave much as a cartel, dictating where and how much an individual's money must go.

Whether it be the great "cap and trade" carbon offset scam or complaints against the "1%", too many progressives have "I know better-than-you" and "big bully" tendencies.
k_m
1.7 / 5 (6) Jun 23, 2012
Why would I not produce a single model drill with replaceable bearings and fittings rather than produce a similar drill that is designed to fail after 4 years?

Why would I change battery compartment shapes every 4 years rather than use a common shape and charger for all drills of the same voltage?

Answer: Planned Obsolescence as a means of producing artificial shortage.

Correct answer: one manufacturer produces several drill models so varying markets' needs can be met.

Since you bring up drills, Black and Decker traditionally caters to the "home" user and offers products priced accordingly. DeWalt offers tools of higher build quality and more diverse designs and as such professionals and skilled workers purchase those. One "company" manufactures both Black and Decker and DeWalt drills. Many parts interchange; planned usage dictates parts' quality and interoperability. Battery technology, not planned obsolescence is the primary design change cause: NiCd, NiMH, Li ion, etc.
Vendicar_Decarian
5 / 5 (2) Jun 23, 2012
"One "company" manufactures both Black and Decker and DeWalt drills. Many parts interchange." - k_m

Actually most parts do not interchange, and virtually no parts are available.

Where can I get a new trigger for any of their drills? Or a new thermal fuse for the battery compartment? Where can I get a new bearing? Chuck? GearBox, Impact plate? Charger cord? Charger plates? Charger controller?

Which of these things are inter-changeable between models when they all perform the same function within each model?

I look forward to your non-response.
Vendicar_Decarian
3.4 / 5 (5) Jun 23, 2012
RyggTard is frothing at the mouth again, and is incapable of composing a coherent English sentence.

"that politicians ban the production of to cause artificial scarcity to satisfy a political agenda is dictatorial economics" - RyggTard

Libertarians are often found to be speaking in tongues. It is part of their Ideological Religion.
xen_uno
2 / 5 (8) Jun 23, 2012
Liberals and socialists live by the mantra "do as I say, not as I do".
Telekinetic
1.4 / 5 (9) Jun 23, 2012
k_m-

"Prepositional Phrases - Arranging Prepositional Phrases
grammar.about.com/od/basicsentencegrammar/a/preppharrange.htm However, like adverbs, prepositional phrases that modify verbs can also be found at the very beginning or very end of a sentence.
ryggesogn2
1.8 / 5 (10) Jun 23, 2012
Answer: Planned Obsolescence as a means of producing artificial shortage.

No, the answer is quality.
Quality is meeting the needs of the customer. Should a drill needed by a homeowner once a year be designed the same as one needed every day by a factory?
How 'Planned Obsolescence' any different than entropy? Nothing can last forever.
Telekinetic
2 / 5 (12) Jun 23, 2012
You'd have to be blind, dumb, or a paid stooge not to see planned obsolescence in personal computer manufacturing. The landfills are full of them.
ryggesogn2
2.2 / 5 (10) Jun 23, 2012
You'd have to be blind, dumb, or a paid stooge not to see planned obsolescence in personal computer manufacturing. The landfills are full of them.

Never worked in design or manufacture have you?
Ever wonder why a space satellite is so expensive? It MUST be designed to last for years in a hostile environment with no opportunity to be repaired.
So sure, a computer could be made to last for 10 years, but would you be willing to pay for it? Especially after new technology has already made it obsolete?
ryggesogn2
1.8 / 5 (10) Jun 23, 2012
Are these designed for obsolescence?
http://www.panaso...ltra.asp

geokstr
1.8 / 5 (10) Jun 23, 2012
EXXON MOBIL CORP (NYSE:XOM
Gross Profit Margin - 33.6%
ROE from Total Operations 25.4%

http://finapps.fo...?tkr=xom


Typical ignorant leftist opining on the hated, evil, debbil capitalism without even a clue about the difference between Gross Margin and Net Profit. Ever run a business?
Vendicar_Decarian
4 / 5 (4) Jun 23, 2012
Absolutely.

Replacement screens are unavailable. Replacement motherboards are unavailable. Replacement CPU's are unavailable. Replacement RAM will be unavailable in 3 years. Replacement keys are unavailable.

Battery life is around 400 charges, and replacement batteries will soon be unavailable.

There are a billion transistors in the thing. One goes bad. You have to throw it out.

"Are these designed for obsolescence?" - RyggTard

Poor RyggTard. Like all Libertarian/Randites, he is incapable of existing in a reality based community.
Vendicar_Decarian
4 / 5 (4) Jun 23, 2012
I wonder what RyggTard thinks about the designers of ink jet cartridges, or model of the month cell phones.

"Never worked in design or manufacture have you?" - RyggTard

Gosh RyggTard. Why is it that whenever I do a quick scan of the keyboards available at my local retailer the models appear to have changed.

Is it really necessary to constantly redesign every keyboard every few months when there have been no improvements in design or quality for the last 20 years or more?

It is magical how the maximal efficiency of the marketplace manages to keep hundreds of keyboard designers at work designing new keyboards with slightly different shapes that all perform exactly the same function, and all of which are essentially interchangable.

Odd too isn't it that HP inkjet cartridges just continue to change shape model after model when the ink and the actual working part of the head itself remains exactly the same. Odd too that it costs me $20 for a new print head but can refill for $.80
Vendicar_Decarian
5 / 5 (2) Jun 23, 2012

Designed to Fail: All Windows Phone 7 handsets sold until the release of WP8 (this fall) cannot be upgraded, and none of them will run Windows Phone 8 apps

Planned obsolescence
http://en.wikiped...lescence

Planned obsolescence
"Planned obsolescence is a business strategy in which the obsolescence (the process of becoming obsoletethat is, unfashionable or no longer usable) of a product is planned and built into it from its conception. This is done so that in future the consumer feels a need to purchase new products and services that the manufacturer brings out as replacements for the old ones." = The Economist

Vendicar_Decarian
5 / 5 (1) Jun 23, 2012
In the 1930s an enterprising engineer working for General Electric proposed increasing sales of flashlight lamps by increasing their efficiency and shortening their life. Instead of lasting through three batteries he suggested that each lamp last only as long as one battery. In 1934 speakers at the Society of Automotive Engineers meetings proposed limiting the life of automobiles. These examples and others are cited in Vance Packard's classic book The Waste Makers.

http://www.uow.ed...ol8.html
Vendicar_Decarian
5 / 5 (2) Jun 23, 2012
In an editorial in Design News toward the end of the fifties, E. S. Safford asked whether engineers should resist the philosophy of planned obsolescence if their management commissioned a 'short-term product' and argued that they should not: "Planned existence spans of product may well become one of the greatest economic boosts to the American economy since the origination of time payments." What was required, he argued was "a new look at old engineering ethics". Instead of trying to build the best, the lightest, the fastest and the cheapest, engineers should be able to apply their skills to building shoddy articles that would fall apart after a short amount of time, all in the interests of the market.

http://www.uow.ed...ol8.html
Vendicar_Decarian
5 / 5 (2) Jun 23, 2012
In August this year (1998) the business magazine Fortune reported on how planned obsolescence is becoming "increasingly sophisticated". In a column, Paul Lukas describes how "many manufacturers, no longer content to spur repeat sales simply by making consumer goods that break down or wear out, now offer products that tell the consumer when they're breaking down or wearing out." For example, Gillette's new shaving cartridge has a blue stripe that fades indicating it needs replacing, whether it does in fact or not. In InfoWorld magazine columnist Ed Foster suggests that the computer industry often makes relatively recent computer systems obsolete by discontinuing parts or accessories for them."

http://www.uow.ed...ol8.html
Vendicar_Decarian
5 / 5 (2) Jun 23, 2012
Planned Obsolescence, a trend started and encouraged in the 1920's by the Phoebus cartel, a group of light bulb manufacturing comapnies, is very much alive today.
Not only companies manufacture products of lower quality than technologically possible, but they do it intentionally. The sooner something breaks, the sooner we will need to replace it, of course, just outside the warranty period

The untold story of planned obsolescence

http://www.apfelk...escence/
Vendicar_Decarian
5 / 5 (2) Jun 23, 2012
Yes. In fact doing so would reduce design and manufacturing costs since the design would not change substantially over time, and would be common to virtually all drills.

And doing so would allow a drill purchased today to be passed on to your children and grand children.

"Should a drill needed by a homeowner once a year be designed the same as one needed every day by a factory?" - RyggTard

I have an old Black and Decker drill that is older than I am. It still works fine because it was designed with a metal transmission, and ball bearings rather than current Dewalt drills that use plastic gears and sleeve bearings and which will be dead in a few years.

Vendicar_Decarian
3.7 / 5 (3) Jun 23, 2012
I still own my original computer which is now almost 30 years old.

It still works.

"So sure, a computer could be made to last for 10 years, but would you be willing to pay for it?" = RyggTard

Yes I paid for it.

So cost isn't the issue. Planned obsolescence is.

Vendicar_Decarian
5 / 5 (3) Jun 23, 2012
Yup.

"Ever run a business?" = GeokTard

I learned that producing inferior products and cheating your customer through advertising was the principle means of making a successful business.
xen_uno
1 / 5 (3) Jun 23, 2012
You get what you pay for ... even higher end companies produce cheap short lived garbage. Higher end DeWalts are still the best. Any of the hammer and higher voltage models will have steel gears and ball bearings. The masses don't want to pay for quality anymore it seems. Good engineering and good materials used to be standard practice (overbuilt), now stuff largely is designed to be just good enough under hypothetical idealistic conditions. These are rarely seen in actual use, so durability takes a hit.
Vendicar_Decarian
3.7 / 5 (3) Jun 23, 2012
But that is a contrived difference. It costs virtually no difference to manufacture a hardened drill over another.

The reason for the difference is the need by Dewalt to create artificial levels of product so that profits can be maximized by selling minimally different products for vastly higher prices.

"Higher end DeWalts are still the best. Any of the hammer and higher voltage models will have steel gears and ball bearings." - xen

A friend of mine once purchased a stereo system and found that the quality of the audio was not up to his expectations. This was in the era when manufacturers actually included a schematic of their product so that it could be repaired. In any case, he noticed that the manufacturer had soldered two capacitors across the outputs of his model for the express purpose of reducing the quality of the audio output.

He removed them and enjoyed the higher audio quality for many years.

This was not a design flaw, but product sabotage by the manufacturer.
Vendicar_Decarian
3.3 / 5 (4) Jun 23, 2012
In a more modern example, Intel has been repeatedly caught selling high speed CPU's as lower speed CPU's if their yields of high speed CPU's are too high.

These days they get caught less often as they solder components directly to the top of the CPU's to lock the core frequencies.

Again, this is product sabotage since it prevents consumers from using the product they have purchased in a manner that maximizes it's speed.

ryggesogn2
1.5 / 5 (8) Jun 23, 2012
designed to be just good enough

That is what the customer's want.
Sounds like most here want to force all companies to manufacture mil-spec products that will cost 10 times what the consumer wants to pay for.
I know I will never buy another cordless drill as the battery technology changes too often.
Telekinetic
2.1 / 5 (7) Jun 23, 2012
"Never worked in design or manufacture have you?"- Ryggesqn2
As a matter of fact, I've designed AND manufactured a number of products, sold and shipped them nationally, and exhibited them at trade shows, all the while knowing that they could be enjoyed by successive generations.
xen_uno
1.7 / 5 (6) Jun 23, 2012
Ven - you sure that the 2 weren't soldered there to bring capacitance up to spec ... ie (2) 20uF's in parallel to equal a spec'd 40uF? As far as sound quality goes, an ABX test (hard to do with hardware) or barring that, an oscilloscope, is the only fair way to hear or measure differences. Many people think louder sounds better which could be the case with your friend.

By the way .. do you call your friend a tard too or are we just special?
ryggesogn2
1 / 5 (4) Jun 23, 2012
"Never worked in design or manufacture have you?"- Ryggesqn2
As a matter of fact, I've designed AND manufactured a number of products, sold and shipped them nationally, and exhibited them at trade shows, all the while knowing that they could be enjoyed by successive generations.

What are these products?
xen_uno
1 / 5 (3) Jun 23, 2012
I've been following and reading about computer technology for years and years, and have never read anything to date regarding Ven's ...

"In a more modern example, Intel has been repeatedly caught selling high speed CPU's as lower speed CPU's if their yields of high speed CPU's are too high."

Each CPU is tested before packaging with an entire battery of tests, ran at highest designed clock speed. If it fails, frequency is dropped til it passes, and that frequency is stamped on the casing. It's possible that Intel did do as you said to make up for shortages of a particular frequency, but I don't see how selling a high speed one as a lower speed one hurts the consumer. With corporations, anything is possible, and only Intel knows the true story.

So whats next, conspiracy to underclock CPU's to force upgrades? Overclockers can get anywhere from 4-5 GHZ on a 2 GHz and greater CPU if cooled properly ...
Vendicar_Decarian
5 / 5 (2) Jun 24, 2012
There was no "spec". Output was to some speakers and this was over 40 years ago. There were no "spec" for such things.

"Ven - you sure that the 2 weren't soldered there to bring capacitance up to spec." - xen

The friend relaying the information was not only an electronics whiz, but also a bit of an audiophile.

There is no question the caps were put there as sabotage by the manufacturer.
Vendicar_Decarian
5 / 5 (2) Jun 24, 2012
The purpose is to avoid overcapacity in chips that are sold to run at higher speeds so the chips that remain can be sold at a premium.

"So whats next, conspiracy to underclock CPU's to force upgrades?" - xen

"have never read anything to date" - xen

Vendicar_Decarian
5 / 5 (2) Jun 24, 2012
Intel Expands $50 Card-Based Processor "Upgrades"

You purchase a crippled CPU and then pay Intel for access to the features they have turned off.

http://www.dailytech.com/Intel Expands 50 CardBased Processor Upgrades/article22452.htm

The Rebinning of Intel CPU's has long been known in the industry. It is better to redistribute higher performing cores to lower performing bins in order to keep the market filled with lower performing parts and keep the margins on higher performing cores at a premium.
Vendicar_Decarian
3.7 / 5 (3) Jun 24, 2012
I have never encountered a customer who want's a product that is designed to fail before it needs to, just as I have never encountered a consumer who want's a product that is priced higher than it should be.

"That is what the customer's want." - RyggTard

But Libertraian/Randite RyggTard apparently has.

Is that the basis of Libertarian Economics? Is that why it has been such a spectacular failure for America and everwhere else it has been employed in even the smallest way?

Consumers seek to get the highest quality product possible at the lowest price.

Corporations seek to produce the worst possible product and sell it at the highest possible price.

If a Libertarian Corporatist / Fascist state, the above two facts produce the worst possible outcome for the consumer.
xen_uno
1.8 / 5 (5) Jun 24, 2012
Ven ...

"This was in the era when manufacturers actually included a schematic of their product so that it could be repaired"

.. you said his amp came with schematics which SHOULD provide data on the components such as resistance and capacitance. My 35 YO pioneer amp (SA7800) did on its schematic. If you totally smoke a resistor for instance, you won't be able to read the color bands, and that's another function of the schematics, besides physical connections.

CPU's are amortized to cover all the machines required to fab plus engineering, testing, and marketing, etc plus the overhead of multimillion dollar salaries in the front office ... so I don't think it's nearly as cut and dried as you make out, but then again I'm not in their accounting department, and neither are you. Intel didn't have serious competition til AMD became a contender, and ever since then Intel (and AMD) have put out faster, cheaper processors.
xen_uno
1.8 / 5 (5) Jun 24, 2012
^^^ above quote contradicting this one ...

"There was no "spec". Output was to some speakers and this was over 40 years ago. There were no "spec" for such things."

You failed on this one, but I won't slander/dork your name as I don't sink to those levels unless provoked.
Job001
1 / 5 (3) Jun 24, 2012
Twenty years ago the mob was prosecuted for "Pump and dump" market manipulation. Same bull-snot, different frequency does not mean spontaneous emergent behavior.
Vendicar_Decarian
5 / 5 (2) Jun 25, 2012
And then along came George Bush and his TeaTard supporters.

"Twenty years ago the mob was prosecuted for "Pump and dump" market manipulation" - Job001

cacortez
1 / 5 (2) Jun 28, 2012
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rocha
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