# What happened to the Cego vs Kabbaz Shirt Thread?



## le.gentleman (Dec 30, 2004)

it seems to be gone - at least I cannot access it anymore. About 10 h ago I still could.

Does anyone know anything about it?


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## Shirtmaven (Jan 2, 2004)

I took him down in the third round with a mean right hook!


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## Alexander Kabbaz (Jan 9, 2003)

Shirtmaven said:


> I took him down in the third round with a mean right hook!


Liar! 
He is exaggerating his strength. It required a one-two combination and a kick in the ...


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## mpcsb (Jan 1, 2005)

Oh and here I thought it was 'The Rapture' and I was left behind.


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## jcriswel (Sep 16, 2006)

*Read only mode*

Actually, I was reading that thread yesterday and got half way through it before it was moved/hidden or whatever you do. I would like to finish reading it. I realize that the tone of the exchange was ungentlemanly at times. I personally think these flame exchanges are ridiculous, but you guys really care about your clothes or your clothing businesses and the passion shows. Nevertheless, it would be nice to resume my reading.

Is there any way to resurrect the post with a _read only_ attribute so that tempers don't flare when more uncivil comments are made?

Actually, some good points on micro economics, running small businesses, and price marketing were made. From a case study perspective, it is good material for an MBA course on small business. It's a shame to deny everyone the opportunity to learn from this exchange even though it's hard not to get caught up in the emotions.


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## Henry (May 4, 2006)

Well it had already been made 'read-only' (or 'locked' in forum parlance) by, I think, Will. A sensible decision.

I suppose another moderator decided that the exchanges were a little too near the knuckle to remain even in that form. A shame, but entirely understandable under the circumstances.


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## gnatty8 (Nov 7, 2006)

jcriswel said:


> Actually, some good points on micro economics, running small businesses, and price marketing were made. From a case study perspective, it is good material for an MBA course on small business. It's a shame to deny everyone the opportunity to learn from this exchange even though it's hard not to get caught up in the emotions.


At the risk of re-opening an acrimonious debate (which I hope I do not), I am not sure I agree with that. I am an economist by training, who also happens to have an MBA as well (economists have to do something to make themselves relevant to corporate America) and I found myself chuckling as I read through some of the _economic_ arguments. Overall, I think Alex's point about efficient pricing coming down to the intersection of supply and demand made the most sense. Hayek put it best. The market is all about the aggregation of information into one basic element -price (whether it is the price of a shirt, a car, a share of stock, or an acre of land in Florida). The free market does not owe us perfection or efficiency. It just seems to work a little better than the alternative system of central planning. I am suspicious of arguments that suggest markets are irrational or inefficient. I think the price that a maker is able to command for their goods or services reflects the value the marginal unit of demand places on those goods or services, period.


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## mpcsb (Jan 1, 2005)

Holy mother of god, let's not go down that path again.


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## Acct2000 (Sep 24, 2005)

I'm suspicious of all of you!!! Well, except for Alex.


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## Alexander Kabbaz (Jan 9, 2003)

AFAIK the thread is neither locked not hidden, but has just dropped off Page 1. That indicates to me that there is really a God.


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## iammatt (Sep 17, 2005)

Alexander Kabbaz said:


> AFAIK the thread is neither locked not hidden, but has just dropped off Page 1. That indicates to me that there is really a God.


well, obviously it has been replaced, since last evening I browsed Mafoofans complete list of posts looking for one that he made in that thread and there were exactly 0 from said thread while this morning they are all back there bright and shiney.


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## Henry (May 4, 2006)

Ah, but it was locked for a while, no? Obviously AK smelt blood and wasn't going to let Will ruin his fun.


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## maxnharry (Dec 3, 2004)

I have my suspicions about economics, but please don't ask me what they are.


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## Alexander Kabbaz (Jan 9, 2003)

iammatt said:


> well, obviously it has been replaced, since last evening I browsed Mafoofans complete list of posts looking for one that he made in that thread and there were exactly 0 from said thread while this morning they are all back there bright and shiney.


 Through nobody's fault but my own, the thread contained a financial reference to a client which was sufficiently specific that his identity could have been discerned. I asked that the reference be removed out of courtesy to the client and thus for a short time last night the thread was in the garage.


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## Alexander Kabbaz (Jan 9, 2003)

Henry said:


> Ah, but it was locked for a while, no? Obviously AK smelt blood and wasn't going to let Will ruin his fun.


 No this is untrue. Just because a thread is contentious - or - just because a thread involves a moderator making an ass of himself - is not sufficient reason for removing or closing the thread.


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## jcriswel (Sep 16, 2006)

gnatty8 said:


> At the risk of re-opening an acrimonious debate (which I hope I do not), I am not sure I agree with that. I am an economist by training, who also happens to have an MBA as well (economists have to do something to make themselves relevant to corporate America) and I found myself chuckling as I read through some of the _economic_ arguments. Overall, I think Alex's point about efficient pricing coming down to the intersection of supply and demand made the most sense. Hayek put it best. The market is all about the aggregation of information into one basic element -price (whether it is the price of a shirt, a car, a share of stock, or an acre of land in Florida). The free market does not owe us perfection or efficiency. It just seems to work a little better than the alternative system of central planning. I am suspicious of arguments that suggest markets are irrational or inefficient. I think the price that a maker is able to command for their goods or services reflects the value the marginal unit of demand places on those goods or services, period.


I respect your knowledge and support your right to chuckle. I'm not an economist. I'm a businessman (also have an MBA in Finance) and I enjoy hearing businessmen/consumers discuss business.

You're right about the validity of the economic arguments. Some of them were based on incomplete knowledge of theory, but that doesn't really matter. What I like about debate on economics is not the abstract adherence to theory, pure academia, it is the implementation of what is learned in the real business world.

If what is taught in academia improves the efficiency of the business world, then I think a little debate among business people with less than thorough recall of the theory is good.


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## Teacher (Mar 14, 2005)

maxnharry said:


> I have my suspicions about economics, but please don't ask me what they are.


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## Henry (May 4, 2006)

Alexander Kabbaz said:


> No this is untrue. Just because a thread is contentious - or - just because a thread involves a moderator making an ass of himself - is not sufficient reason for removing or closing the thread.


Apologies - didn't mean to cause offence.


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## Alexander Kabbaz (Jan 9, 2003)

Henry said:


> Apologies - didn't mean to cause offence.


 If offence is how British English spells offense, how is offensive written? None taken, BTW.


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## mafoofan (May 16, 2005)

gnatty8 said:


> At the risk of re-opening an acrimonious debate (which I hope I do not), I am not sure I agree with that. I am an economist by training, who also happens to have an MBA as well (economists have to do something to make themselves relevant to corporate America) and I found myself chuckling as I read through some of the _economic_ arguments. Overall, I think Alex's point about efficient pricing coming down to the intersection of supply and demand made the most sense. Hayek put it best. The market is all about the aggregation of information into one basic element -price (whether it is the price of a shirt, a car, a share of stock, or an acre of land in Florida). The free market does not owe us perfection or efficiency. It just seems to work a little better than the alternative system of central planning. I am suspicious of arguments that suggest markets are irrational or inefficient. I think the price that a maker is able to command for their goods or services reflects the value the marginal unit of demand places on those goods or services, period.


I don't think this properly represents the arguments that were made. So, if you please, let me respond.

*1.)* Yes, supply and demand determine price--but some times less efficiently than others. See my second point.

*2.)* No, the free market does not 'owe' efficiency, but efficiency is ostensibly _why_ it is preferable over a command economy. Without this added efficiency, there would be little if no reason to prefer free markets in the first place. However, this does not mean that free markets are _perfectly_ efficient. I don't believe I would ever make such a ridiculous claim.

*3.)* You state: "I think the price that a maker is able to command for their goods or services reflects the value the marginal unit of demand places on those goods or services, period." But certainly, as someone with economic training, you acknowledge the problem of monopolies. A monopoly can command prices that can be so inefficient as to cripple the benefts of a free market; hence some degree of regulation is necessary to combat such anomalies.

Generally, I agree with you that free markets tend to allow prices to be efficiently determined by demand. However, if cost--and therefore, money--is of no consideration to an actor, the price that actor is willing to pay will bear no correlation with his demand for the good. One's offering price would simply be that which is higher than others'. We'd all be buying trillion-dollar Big Macs. Yes, this is absurd (mainly because money is a limited resource)--that's why I took issue with Alex's representation of his business.

_I_ do not believe there are many, if any, individuals that behave or think this way. If there _were_ a significant number of such individuals, the free market would collapse as it would grow cripplingly inefficient.

_Alex_ suggested that _his_ clients are such cost-immune actors. If they _are_ cost-immune, they represent a segment of the market that are willing to pay inefficiently high prices. Thus, the price of Alex's shirts would be significantly determined irrationally (in the economic sense of the word).

_I_ don't think that Alex's clients could be so cost-immune. Others have agreed on the same point. Thus, unbeknownst to Alex, _he has been arguing against his own favor_, while I have been attempting to make sense of his high prices. _I_ was the one arguing that, in all likelihood, his shirts _are_ efficiently priced: that is to say, they offer benefits rationally measured and valued by his clients.


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## Alexander Kabbaz (Jan 9, 2003)

gnatty8 said:


> At the risk of re-opening an acrimonious debate (which I hope I do not), I am not sure I agree with that. I am an economist by training, who also happens to have an MBA as well (economists have to do something to make themselves relevant to corporate America) and I found myself chuckling as I read through some of the _economic_ arguments. Overall, I think Alex's point about efficient pricing coming down to the intersection of supply and demand made the most sense. Hayek put it best. The market is all about the aggregation of information into one basic element -price (whether it is the price of a shirt, a car, a share of stock, or an acre of land in Florida). The free market does not owe us perfection or efficiency. It just seems to work a little better than the alternative system of central planning. I am suspicious of arguments that suggest markets are irrational or inefficient. I think the price that a maker is able to command for their goods or services reflects the value the marginal unit of demand places on those goods or services, period.





jcriswel said:


> I respect your knowledge and support your right to chuckle. I'm not an economist. I'm a business man (also have an MBA in Finance) and I enjoy hearing business men/consumers discuss business.
> 
> You're right about the validity of the economic arguments. Some of them were based on incomplete knowledge of theory, but that doesn't really matter. What I like about debate on economics is not the abstract adherence to theory, pure academia, it is the implementation of what is learned in the real business world.
> 
> If what is taught in academia improves the efficiency of the business world, then I think a little debate among business people with less than thorough recall of the theory is good.


Does it then follow that a greater number of economists than businesspersons are required to screw in a light bulb?


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## Alexander Kabbaz (Jan 9, 2003)

Mafoofan: We both made complete asses of ourselves in the referenced thread. I, for my part, am willing to acknowledge that. Can't you join me in a bit of humility and let these gentlemen carry on their discussion without beating the dead horse. Please.


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## emorel98 (Oct 9, 2005)

gnatty8 said:


> At the risk of re-opening an acrimonious debate (which I hope I do not), I am not sure I agree with that. I am an economist by training, who also happens to have an MBA as well (economists have to do something to make themselves relevant to corporate America) and I found myself chuckling as I read through some of the _economic_ arguments. Overall, I think Alex's point about efficient pricing coming down to the intersection of supply and demand made the most sense. Hayek put it best. The market is all about the aggregation of information into one basic element -price (whether it is the price of a shirt, a car, a share of stock, or an acre of land in Florida). The free market does not owe us perfection or efficiency. It just seems to work a little better than the alternative system of central planning. I am suspicious of arguments that suggest markets are irrational or inefficient. I think the price that a maker is able to command for their goods or services reflects the value the marginal unit of demand places on those goods or services, period.


Economic theory is wonderful until you step out of the classroom.


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## emorel98 (Oct 9, 2005)

Alexander Kabbaz said:


> without beating the dead horse.


Beating it???

The poor horse is being run thorugh a meat grinder, Sopranos-style.


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## maxnharry (Dec 3, 2004)

mafoofan said:


> _Alex_ suggested that _his_ clients are such cost-immune actors. If they _are_ cost-immune, they represent a segment of the market that are willing to pay inefficiently high prices. Thus, the price of Alex's shirts would be significantly determined irrationally (in the economic sense of the word).
> 
> _I_ don't think that Alex's clients could be so cost-immune. Others have agreed on the same point. Thus, unbeknownst to Alex, _he has been arguing against his own favor_, while I have been attempting to make sense of his high prices. _I_ was the one arguing that, in all likelihood, his shirts _are_ efficiently priced: that is to say, they offer benefits rationally measured and valued by his clients.


Why don't you think that Alex's clients could be so cost-immune? Just because you don't think so? There are numerous examples of irrational pricing and people willingly paying those prices.

Alex's operation is a small one by any definition, so the total number of possible clients is small. His location on the East End of Long Island and within an hour or two of Manhattan situates him perfectly to cater to a relatively large number of potentially cost immune people, who would rather pay an irrationally determined price to outsource some of the trouble associated with shopping for a properly fitting shirt.

I agree with you that Alex's product is superior to others in many ways and this superiority accounts for some of the high price, but if you compare his product to his nearest competitors, one would have to ascribe price immunity to a portion of the cost.


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## Cantabrigian (Aug 29, 2005)

"Markets look a lot less efficient from the banks from the Hudson than from the banks of the Charles." -Fischer Black

I don't really know what that means. But I think he's saying that things are more expensive in New York so it makes sense that Alex's clients would pay more.


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## iammatt (Sep 17, 2005)

Cantabrigian said:


> "Markets look a lot less efficient from the banks from the Hudson than from the banks of the Charles." -Fischer Black
> 
> I don't really know what that means. But I think he's saying that things are more expensive in New York so it makes sense that Alex's clients would pay more.


Come on. You do understand it, don't you?


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## Cantabrigian (Aug 29, 2005)

emorel98 said:


> The poor horse is being run thorugh a meat grinder, Sopranos-style.


I'd put that at the top of the list of smileys that need to be added.


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## Cantabrigian (Aug 29, 2005)

Nope.

But I do know that one day Eugene Fama was walking past the Oxxford factory (so that this has something to do with clothes) with a grad student he was advising. As they're going along, Fama walks right over a $20 bill and keeps going.

The grad student asks him why he didn't stop to pick up the bill. Fama responds that there couldn't really have been a $20 bill on the ground because someone would have already picked it up. :icon_smile_wink:



iammatt said:


> Come on. You do understand it, don't you?


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## mafoofan (May 16, 2005)

maxnharry said:


> Why don't you think that Alex's clients could be so cost-immune? Just because you don't think so? There are numerous examples of irrational pricing and people willingly paying those prices.
> 
> Alex's operation is a small one by any definition, so the total number of possible clients is small. His location on the East End of Long Island and within an hour or two of Manhattan situates him perfectly to cater to a relatively large number of potentially cost immune people, who would rather pay an irrationally determined price to outsource some of the trouble associated with shopping for a properly fitting shirt.
> 
> I agree with you that Alex's product is superior to others in many ways and this superiority accounts for some of the high price, but if you compare his product to his nearest competitors, one would have to ascribe price immunity to a portion of the cost.


To clarify again.

*Minor point. *

I am not saying that Alex's clients can't be "so cost-immune." I'm saying I dont think they are _absolutely_ cost-immune. Of course, to be anything less than absolutely cost-immune is to be cost-_sensitive_. My conjecture is that we are _all_ cost-sensitive; this is a basic tenet of economics, without which analyses of cost-benefit and supply-demand would make no sense whatsover. However, this minor point is ultimately neither here nor there.

*Major point(s). *

I don't know how cost-sensitive Alex's clients are--this is empirical information I freely admit is beyond accessibility. However, knowing this information isn't important as we can track all the possibilities.

Either _all_ of Alex's clients are cost-immune, _some_ are cost-immune, or _none_ are cost-immune.

If _all_ of Alex's clients are cost-immune, his prices will _not_ be market-efficient, barring an act of unlikely economic altruism on Alex's part (no Alex, this is not a knock at you or your generosity). This is an unpleasant result, and something that--if true--Alex, as a businessman, would probably not want advertised. However, I do not suppose that this is the case.

If _some_ of Alex's clients are cost-immune, the efficiency of his pricing will vary inversely with their ratio to his cost-sensitive clients. In other words: the greater the number of cost-immune clients, the more _inefficient_ the price. At a certain point, the number of cost-immune clients will 'tip the scale', so to speak, and cause the price to be so inefficient that cost-sensitive clients will no longer buy. In that case, Alex's clients will then be _all_ cost-immune, returning us to the above scenario.

If _none_ of Alex's clients are cost-immune, than his prices will be, at least somewhat, market-efficient--barring some other market failure such as a monopoly. In this case, the only question to ask is what benefits his clients accrue for the price they are willing to pay.

So, that leaves us with two possible outcomes: Alex's prices are market-inefficient, or they are market-efficent. If the former, Alex's shirts are, in a sense, over-priced in one of the few instances where something can truly be 'over-priced' in a free market since the actors involved are acting economically irrational. If the latter--the more likely case--then there are indeed certain benefits to Alex's shirts to be discussed relative to the price one pays, a discussion of _value_.

Hence, Alex's shirts and CEGO's shirts can readily be compared by the metrics of price and quality (or more generally, benefits), without offense to either shirtmaker. The problems only ensue when one or the other metric is ignored.


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## mafoofan (May 16, 2005)

Cantabrigian said:


> "Markets look a lot less efficient from the banks from the Hudson than from the banks of the Charles." -Fischer Black
> 
> I don't really know what that means. But I think he's saying that things are more expensive in New York so it makes sense that Alex's clients would pay more.


By "the banks of the Charles," I infer the author is referring to Harvard University explicity and the academic world implicitly. On the other hand, "the banks of the Hudson" more obviously refers to Manhattan explicitly and the financial world implicitly.

Apologies in advance if you really did already know this .


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## gnatty8 (Nov 7, 2006)

mafoofan said:


> _Alex_ suggested that _his_ clients are such cost-immune actors. If they _are_ cost-immune, they represent a segment of the market that are willing to pay inefficiently high prices. Thus, the price of Alex's shirts would be significantly determined irrationally (in the economic sense of the word).


I don't think it is uncommon to see markets where demand is relatively inelastic (not terribly responsive to price changes), and I think the market for luxury goods is perhaps the most common example of inelastic demand. In this market, demand is likely to be high (everybody wants an Alexander Kabbaz shirt do they not?), but supply is likely to be low. This means that price is more a function of where that supply curve is, than where the demand curve is. Certainly, there are close substitutes, and the extent to which the "market" for luxury shirts feels that Charvet is a close substitute, then some demand may peel away from the Kabbaz shirt and into the Charvet camp. However, at the end of the day, I think it is perfectly reasonable for Alex (I hope you don't mind my familiarity here) to say that demand for his shirts is relatively price inelastic, and I don't doubt that one bit.

I think we have to trust that the market is what the market is. There are no significant barriers to entry or high capital costs/large sunk costs in the shirt making market, so if Mr. Kabbaz's prices were not efficient, I think we would see competitors entering the market and competing those customers away, would we not?


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## Cantabrigian (Aug 29, 2005)

mafoofan said:


> By "the banks of the Charles," I infer the author is referring to Harvard University ...


In Black's case, it was probably the vocational school further down the river. (Though he did get his PhD at the better school on the northern banks of the Charles.) :icon_smile:


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## medwards (Feb 6, 2005)

As much as I hate to intervene, this discussion is clearly one for The Interchange. For those who want to continue the original discussion, that thread is still on the Fashion Forum. For those who want to explore economic theory, you can do so here. And so it goes....


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## Wayfarer (Mar 19, 2006)

*SCREEN SHOT!*



Alexander Kabbaz said:


> No this is untrue. Just because a thread is contentious - or - just because a thread involves a moderator making an ass of himself - is not sufficient reason for removing or closing the thread.


Okay, all you mods...this is going to come back to haunt you. :aportnoy:


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## Wayfarer (Mar 19, 2006)

*You are correct*



emorel98 said:


> Economic theory is wonderful until you step out of the classroom.


Because once the doubting Thomas steps out of the class, the truth of much of it will bite the unbeliever in the proverbial behind.


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## mpcsb (Jan 1, 2005)

Wayfarer said:


> Okay, all you mods...this is going to come back to haunt you. :aportnoy:


Oh like it isn't already - :devil:


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## Cantabrigian (Aug 29, 2005)

medwards said:


> As much as I hate to intervene, this discussion is clearly one for The Interchange. And so it goes....


Was it my lame jokes?


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## mafoofan (May 16, 2005)

gnatty8 said:


> I don't think it is uncommon to see markets where demand is relatively inelastic (not terribly responsive to price changes), and I think the market for luxury goods is perhaps the most common example of inelastic demand. In this market, demand is likely to be high (everybody wants an Alexander Kabbaz shirt do they not?), but supply is likely to be low. This means that price is more a function of where that supply curve is, than where the demand curve is. Certainly, there are close substitutes, and the extent to which the "market" for luxury shirts feels that Charvet is a close substitute, then some demand may peel away from the Kabbaz shirt and into the Charvet camp. However, at the end of the day, I think it is perfectly reasonable for Alex (I hope you don't mind my familiarity here) to say that demand for his shirts is relatively price inelastic, and I don't doubt that one bit.
> 
> I think we have to trust that the market is what the market is. There are no significant barriers to entry or high capital costs/large sunk costs in the shirt making market, so if Mr. Kabbaz's prices were not efficient, I think we would see competitors entering the market and competing those customers away, would we not?


What you say is probably true about the inelasticity of the demand curve in the context of luxury goods. Nonetheless, a cost-sensitive client will not spend to purchase a good more than he values it. If there is a monopoly at work, this can still lead to inefficient and perhaps intolerable results, but ultimately, what you are describing doesn't contradict the possible outcomes I've described.

That is to say, the scarcity of Kabbaz or Kabbaz-like shirts does not bear on the cost-sensitivity of potential clients, nor does it repudiate the outcome that would occur if all clients were in fact cost-immune. If they are cost-sensitive, they will spend up to the price at which they value the shirts. If they are cost-immune, they will spend whatever arbitrary amount it takes to get the shirts regardless of their perceived value, leading to geometrically increasing prices.

On the issue of competition. It would appear that the entry costs into the shirt market may very well be high. Although inelastic, the demand curve can either be low or high. If low, then perhaps the entry costs are not high and supply has sufficiently met demand. On the other hand, if the demand curve is high and inelastic, it's a great market to enter as a seller since you can be pretty sure people will buy your shirts--the only thing preventing you would be high entry costs.

Also, part of the point is that there _are_ competitors. Charvet and other high-priced makers compete by attempting to offer more benefits for about the same price. Lower-priced alternatives such as CEGO, or even Jantzen, compete by lowering their prices and perhaps offering a superior cost-benefit ratio. Who knows how much overlap there is between potential Jantzen and Kabbas clients--perhaps very little, but it would be difficult to estimate and impossible to repudiate.

The reason why it might seem strange to compare CEGO to Kabbaz is not because they are incomparable (which would require the presumption that there is _no_ overlap between potential clients--a presumption already put into question by the existence of the original thread's OP, and anybody who has bought both cheap and expensive shirts). Rather, it seems a strange comparison because there is, evidently, little overlap betwen the shirtmakers' potential clients; thus, it is rare that the issue even comes up. In this case, it did.


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## Acct2000 (Sep 24, 2005)

How many angels can dance on the head of a pin?

Should they wear a CEGO Shirt or a Kabbaz Shirt while they dance?


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## jamgood (Feb 8, 2006)

gnatty8 said:


> I think the price that a maker is able to command for their goods or services reflects the value the marginal unit of demand places on those goods or services, period.


In a specific market at a specific point in time

(One's surname is impressively enhanced by a series of academic acronyms obtained from highly respected Interweb Institutions. One is oft asked by discount store cashiers: "Are you a professor or somethin'?")


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## gnatty8 (Nov 7, 2006)

jamgood said:


> In a specific market at a specific point in time
> 
> quote]
> 
> Uh, yes, I am not aware of the existence of a liquid forward market for luxury shirts, at least not yet. In terms of specific market, I am assuming you are defining market as the market for luxury shirts and not in geographical terms. If it is the former, then yes, that point is obvious.


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