Laws Against Price Gouging

[Zkribbler]

Originally posted by Imran Siddiqui
4 should be "Decrease Demand

It is now God bless the "edit" button

[Kidlicious]

Originally posted by Arrian
The average over time is what matters. Taking a snapshot during a price spike is pretty meaningless.

-Arrian

Price gouging only occurs in the short run. There are reasons why there are higher average margins in other industries.

[Kontiki]

Profits as a percentage of revenues for 2005:

Exxon - 10.6%
Microsoft - 30.8%
Citigroup - 18.8%
Johnson & Johnson - 20.6%
Intel - 22.3%
Coca Cola - 21.1%
AT&T - 10.9%
3M - 15.1%

[Kidlicious]

Originally posted by Kontiki
Profits as a percentage of revenues for 2005:

Exxon - 10.6%
Microsoft - 30.8%
Citigroup - 18.8%
Johnson & Johnson - 20.6%
Intel - 22.3%
Coca Cola - 21.1%
AT&T - 10.9%
3M - 15.1%

So you think Exxon isn't making economic profit because their profit margin is smaller?

[Zkribbler]

Imran's chart is disturbing....

Three of the high-profit industries (banks, financial service and telecom services) are what Scott Adams has dubbed "confusopolies," that is, a group of companies which all offer pretty much the same service, and so they make their pricing so complicated that it is nearly impossible to compare prices.

Pharmaceudicals have a lot of govermental patent protection, etc. and do things like "tweek" their formulas to extend the length of the patent-protected monopoly.

So these four industries keep profits high by tap dancing their way around the concept of a free market economy.

I'm surprised about food and beverage. I would have thought that competition would keep these prices low, but I guess not.

[Imran Siddiqui]

I'm surprised about food and beverage. I would have thought that competition would keep these prices low, but I guess not.

Ya gotta eat.

[Kontiki]

Originally posted by Kidicious


So you think Exxon isn't making economic profit because their profit margin is smaller?

Did I say anything about economic profit? I'm just pointing out that your assertion about there not being more profitable industries/companies on a margin basis is bull****.

[Kidlicious]

Originally posted by Kontiki


Did I say anything about economic profit? I'm just pointing out that your assertion about there not being more profitable industries/companies on a margin basis is bull****.

Actually I said industries, and I guess you could add software, but only because Microsoft is so big.

[Kidlicious]

Originally posted by Zkribbler
I'm surprised about food and beverage. I would have thought that competition would keep these prices low, but I guess not.

Competition is very high for agricultural products, but not for products like Coke.

[Kontiki]

Originally posted by Kidicious


Actually I said industries, and I guess you could add software, but only because Microsoft is so big.

Just to hopefully end all the BAMs:

http://money.cnn.com/magazines/fortune/fortune500/performers/industries/return_on_revenues/index.html

Top industriesMost Profitable Industries: Return on Revenues
Industry Rank Industry 2005 Profits as
% of Revenues
1 Mining, Crude-Oil Production 29.9
2 Internet Services and Retailing 23.8
3 Commercial Banks 18.3
4 Network and Other Communications Equipment 15.8
5 Pharmaceuticals 15.7
6 Medical Products & Equipment 13.2
7 Securities 12.7
8 Railroads 12.5
9 Diversified Financials 12.4
10 Publishing, Printing 11.8
11 Household and Personal Products 11.1
12 Insurance: Life, Health (stock) 10.3
13 Homebuilders 9.9
14 Insurance: P & C (stock) 9.0
15 Oil and Gas Equipment, Services 8.7
16 Entertainment 8.4
17 Food Consumer Products 8.4
18 Electronics, Electrical Equipment 8.2
19 Food Services 8.0
20 Computers, Office Equipment 7.5
21 Health Care: Insurance & Managed Care 7.1
22 Hotels, Casinos, Resorts 6.8
23 Industrial & Farm Equipment 6.6
24 Apparel 6.5
25 Petroleum Refining 6.1
26 Utilities: Gas & Electric 6.0
27 Chemicals 5.8
28 Metals 5.6
29 Beverages 5.3
30 Information Technology Services 5.1
31 Aerospace and Defense 4.9
32 Health Care: Medical Facilities 4.6
33 Telecommunications 4.2
34 General Merchandisers 4.1
35 Specialty Retailers 4.0
36 Semiconductors and Other Electronic Components 3.9
37 Energy 3.0
38 Food Production 2.8
39 Health Care: Pharmacy and Other Services 2.8
40 Wholesalers: Diversified 2.3
41 Engineering, Construction 2.2
42 Wholesalers: Food and Grocery 2.1
43 Food & Drug Stores 1.6
44 Pipelines 1.4
45 Wholesalers: Electronics and Office Equipment 1.4
46 Wholesalers: Health Care 1.3
47 Automotive Retailing, Services 1.1
48 Motor Vehicles & Parts 1.1
49 Packaging, Containers 0.4
50 Airlines -10.6

So, out-of-the-ground production - very profitable. Refining and retailing - not so much.

[Arrian]

8 Railroads 12.5

Really? That one jumps out at me.

-Arrian

[Kontiki]

BTW, Exxon, Chevron, Conoco, Sunoco et al fall under the Petroleum Refining category.

[Kidlicious]

Originally posted by Kontiki
Refining and retailing - not so much.

That's not so. You should know that you can't compare across industries like that. Obviuosly they are making economic profit in oil production, but to see if they are in refining you have to compare their year to year margins and the historic trends. That will tell you if it's profitable to expand.

[Jon Miller]

Originally posted by loinburger
Let's just nationalize the oil industry and send the executives to the guillotine. Problem solved. As an added bonus, we can then sell off the executives' estates to buy bread and circuses.

Sounds good to me!

JM

[Kidlicious]

Here's a better measure although you still have to look at other things.

Return on Shareholder's Equity

1 Household and Personal Products 41.5
2 Homebuilders 26.1
3 Petroleum Refining 25.8
4 Mining, Crude-Oil Production 23.6
5 Pharmaceuticals 23.4
6 Food Services 23.2
7 Food Consumer Products 21.8
8 Industrial & Farm Equipment 21.1
9 Computers, Office Equipment 19.7
10 Specialty Retailers 19.1
11 Oil and Gas Equipment, Services 18.9
12 Metals 18.3
13 Chemicals 18.1
14 Medical Products & Equipment 17.3
15 Apparel 16.9
16 Health Care: Medical Facilities 16.6
17 Beverages 16.4
18 Securities 16.3
19 Aerospace and Defense 16.3
20 Health Care: Insurance & Managed Care 16.2
21 Internet Services and Retailing 15.6
22 Commercial Banks 15.5
23 Wholesalers: Food and Grocery 15.4
24 Wholesalers: Diversified 15.1
25 Diversified Financials 15.0
26 Motor Vehicles & Parts 14.6
27 General Merchandisers 14.1
28 Railroads 14.1
29 Hotels, Casinos, Resorts 13.7
30 Information Technology Services 13.6
31 Pipelines 13.5
32 Insurance: Life, Health (stock) 13.0
33 Insurance: P & C (stock) 12.3
34 Publishing, Printing 12.2
35 Wholesalers: Health Care 12.2
36 Electronics, Electrical Equipment 12.1
37 Engineering, Construction 11.8
38 Health Care: Pharmacy and Other Services 11.4
39 Semiconductors and Other Electronic Components 10.9
40 Automotive Retailing, Services 10.8
41 Utilities: Gas & Electric 10.4
42 Food & Drug Stores 10.0
43 Wholesalers: Electronics and Office Equipment 8.5
44 Energy 7.4
45 Food Production 6.2
46 Entertainment 5.9
47 Network and Other Communications Equipment 5.2
48 Packaging, Containers 4.6
49 Telecommunications 4.2

Refining is even higher than production.