Conference noted::bicycle

    This is common in other markets, such as home audio.  Some well
    regarded products are very difficult to get a discount on due to
    careful control of dealer networks.

    The claim is this is to protect their reputation and ensure proper
    demonstration of their equipment.

    Anyhow, it doesn't concern me since there are other bicycles
    besides specialized (not that I'm in the market for equipment - if
    I were I'd want a Merlin anyway.)

    - Jim

    Funny that this topic has come up the day after my Economics class on
    Anti-Trust.  This price setting and enforcement by manufacturers has
    been going on since the Ronnie-years.  Ron and the boys/girls are
    advocates of laissez-faire business.  Ie: Business can do no wrong and
    gov't shouldn't tamper with it.  Bottom Line:  If you want Specialized
    equipment that bad, you're going to have to pay the price.  Good for
    the dealer who put the sign up.
    
    Eric_just_call_me_John_Kenneth_Galbraith_Frere

But the manufacturer has every right to set conditions for dealing with said 
manufacturer.  After all, it IS the manufacturer's PROPERTY (for those who 
believe in property rights).  Note that Specialized cannot force a dealer to 
sell at 'list price'... they can only ensure that dealers that want to discount
their product don't have access to it.  

The dealer also has the right to sell the product for whatever price s/he sees
fit.  The dealer DOES NOT have the right to purchase product from any particular 
supplier.  All commerce must be by mutual consent, which means that both parties
must negotiate terms that are acceptable to each.  If agreement can't be reached,
then the two parties don't do business.  Its as simple as that.

Kevin_just_call_me_John_Galt_Klasman

ps.  I love Specialized Turbo/R tires, but only buy them when I find them on 
sale.  I might also want a Specialized Allez Epic bike... but would only buy it 
if the price is right... which is NOT list price.  The same principle I stated 
above applies to me and the dealer, and/or the manufacturer; if we can't agree
on terms, we don't do business!

>Note that Specialized cannot force a dealer to 
>sell at 'list price'... they can only ensure that dealers that want to discount
>their product don't have access to it.  

	Yet this amounts to the same thing, and is illegal.  The FTC is
	investigating.  

	The article states that House Judiciary Committe Chairman Jack
	Brooks asserts that resale-price maintenance costs US consumers
	$20 billion a year.  Lawmakers are trying to eliminate loopholes.
	The bush administration, following the laissez-faire Reagan
	years, is stepping up investigations.

	The article explains that resale-price maintenance benefits the
	manufacturers and retailers who don't want to compete.  Retailers
	for whom price competititon is important lose, as do consumers.

	The articles says that "The Specialized policy... contains a dis-
	claimer that makes it technically legal.. The Specialized disclaimer
	states:" We do not seek and we cannot accept complaints from any
	dealer about the discounting practices of another."	

		Dave

    
    	Gucci has been doing this for years.  I
    went to several jewlers that all carried
    the same watch that I wanted but was not
    willing to pay $500 for.  They all said the
    same thing.  If I sell you the watch for
    less than $500 Gucci will pull my license
    to sell their products.  Sounds like 
    specialized is only following in their
    footsteps.
    
    		_Jerry_just_call_me_Adam_Smith

	Hey, I'm impressed, bikies reading the Wall St Journal!!  I must
remember to get the FT next Monday and see what they think about Lemond and
Fignon!!

Robin_just_call_me_a_Beano_reader

    You'd be suprised Robin, you might find a better coverage than most
    (UK) papers (but dont quote me)
    
    Rod (missing L'equipe a lot less now someone types it in for me...)

>Note that Specialized cannot force a dealer to 
>sell at 'list price'... they can only ensure that dealers that want to discount
>their product don't have access to it.  

>>	Yet this amounts to the same thing, and is illegal.  The FTC is
>>	investigating.  

I'm not talking about what's legal, but what's right!  And what's legitimate 
behavior under the concept of PERSONAL PROPERTY rights, on which this country 
was founded.  We have quite a few laws on the books that are a total travesty of
justice, that violate the principles of personal property rights, and this is 
one of them.

Do you really want the government to tell you how much you can sell your 
personal property for, or to whom?  (I know the gov't already does this in many
cases, but is that what you want?  

re: 	The article states that House Judiciary Committe Chairman Jack
	Brooks asserts that resale-price maintenance costs US consumers
	$20 billion a year. 

So what?  Allowing businesses (like DEC) to make a profit undoubtedly costs US 
consumers billions a year, too, so should we not allow anyone to make a profit?
Giving it all away would save consumers a lot, that is, until there was nothing
left to give away, and then we'd all pay dearly.

There is no such entity as "consumers" anyway.  We're all just individuals, both
producer (hopefully) and consumer.  Thus the only rights we have are individual
rights, personal property rights.

Kevin_just_call_me_Howard_Roark

                      
    
    What about the "personal property rights" of the retailer to sell his
    goods for the price he deems fit for his own market?  Without undue
    external influence by an outside entity- a much larger corporation?
    What about his right to compete on the basis of whatever he sees fit-
    such as price?  What right does the much larger corporation have to tell him
    how to run his business?  This country was founded on the rights of
    individuals to make their own judgements on how to dispose of their
    property- even if at a loss if the retail businessman so wills it?
    
    In any event, how about if this sort of discussion is continued in
    the "Kickstands and Global Microeconomics:  Keynes vs. Marx" note?
    
    	Dave 

    
    I really don't see what the problem is here. Specialized has 
    guaranteed their dealers a fixed profit per bike. They could easily
    raise prices to their dealers to "enforce" a minimum priced charged
    for the bike. Instead, they set a policy whereby they can be sure
    of a min price per bike. 
    
    IF they were the only manufacturer of bicycles sold ( or one of 
    only a very few), then this could be a problem. IF
    ALL (or most) bicycle manufacturers used the same tactics then this
    could be a problem.  As the bicycle market exists today, though, 
    there are so many manufacturers and so many bikes out there that
    Specialized hardly deserves a second look. Note: because of the 
    way that they do business, I have not purchased a Specialized 
    Ground Control since they stopped selling them through Nashbar. I
    simply cannot see paying $25+ per tire at a bike shop when there 
    are so many others around. 
    I think that there are problems with the way they do business, 
    but that it doesn't make any difference until those practices 
    interfere with the bicycle market as a whole.
    From my observation ( read "IMHO") , there are fewer new Specialized
    bikes on the trail today than there were two years ago. It would 
    be interesting to see their sales figures for the last 5 years. 
    
    
    doug
      

    It's simple. What's good for Specialised is good for America.
    
    
    Rod

>    It's simple. What's good for Specialised is good for America.

So buy what you think is best, and send a donation to Specialized.

Re: .9, one point at a time...


re:     In any event, how about if this sort of discussion is continued in
    the "Kickstands and Global Microeconomics:  Keynes vs. Marx" note?
 
I believe the question about whether Specialized's tactic is right or not is 
implicit in the base note, so I'll continue.  If you're not interested, skip the
rest of this reply(s).

re:     What about the "personal property rights" of the retailer to sell his
    goods for the price he deems fit for his own market?  

Once a retailer has purchased the goods, they are now his/her property and s/he
can dispose of them in any way s/he sees fit.  However, the retailer has no
personal property rights over as yet unpurchased goods... those still belong to 
the manufacturer who maintains the rights to such goods.  I don't believe there
is anything the manufacturer can do (either legally or ethically) to prevent a 
retailer from selling the product at a discount (assuming the product has been
bought and paid for... if its on consignment, then that's a different story).
The manufacturer's only alternative is to refuse to sell more product to the 
discounting retailer, which is perfectly within the manufacturer's personal 
property rights.

As stated above, neither parties rights have been violated.


re: Without undue external influence by an outside entity- a much larger 
corporation?

This statement is so ambiguous as to be useless, which is, IMO, why it is stated
, to be used to justify anything.


re: What about his right to compete on the basis of whatever he sees fit-
    such as price? 

The retailer does have this right, and nothing I've said, or Specialized had 
done, has violated that right.  The retailer DOES NOT have the right to buy 
product from Specialized, or any other manufacturer, for that matter.  To give
this supposed right to the retailer is to violate the manufacturer's rights, and
by definition, one person can't have a 'right' that violates someone else's 
rights.


re:What right does the much larger corporation have to tell him how to run his 
business?

They don't, and they're not.  They're simply stating that if both parties can't
agree and a business relationship, then none will exist.  No rights violated 
here.  The disagreement here is obvious.


re: This country was founded on the rights of
    individuals to make their own judgements on how to dispose of their
    property- even if at a loss if the retail businessman so wills it?


I absolutely agree!  And my position protects BOTH parties.  The opposing 
position does not.

    
    RE:  .11
    
    	Ha ha!
    
    RE:  .13
    
    	Write your congressperson.
    
    		
    
    		Dave

    There are  two issues here. The first is what it means to offer to
    sell  to  the  public,  and the second is the basis for anti-trust
    law.

    Once a  person  (or  corporation)  offers  to sell products to the
    public, they are legally required to make the same offer to anyone
    who wishes to buy from them. The most obvious cases were the civil
    rights  cases:  I  can't  offer to sell only to people of one skin
    color, regardless of how sure I am that purple skin is required to
    use my products.

    Under this  argument,  Specialized  (by  offering  to  sell to the
    "public")  is  required  to  sell  at the same price to anyone who
    wishes  to  buy  from  them  (under  the  same  conditions,  which
    generally  means,  similar quantities and delivery times, but does
    not  include  restraints  on the purchaser's ability to dispose of
    the goods.)

    The second argument is more interesting. Classical economic theory
    of  capitalism  assumes  that  there  are  lots of small "economic
    players"  and  NO  large  players. This assumption no longer makes
    sense.  In the classical theory, there would be about as many bike
    manufacturers  as  bike  sellers, and they would all be of similar
    size.  There  would  be  no  opportunity  for economic coercion on
    anyone's  part  because  if  they  tried what Specialized is doing
    there would be lots of other bikes the dealer could sell.

    There are  perhaps  a dozen major bicycle manufacturers, and about
    as  many  major  component  manufacturers.  There are a dozen bike
    shops  in  a  small  city.  Because of the tremendous disparity in
    size,  there is an opportunity for the manufacturers to coerce the
    shops.  This is what Specialized is doing.

    Depending on  what  fraction  of  the  bicycle  (or bicycle parts)
    market  Specialized has, this could be legal (if they have a small
    fraction) or illegal (if they have a large fraction).


    Of course  this whole thing may be counterproductive, as I stopped
    buying  Specialized  stuff when it dissapeared from the mail order
    catalogs.  

--David

The kind of arrangment Specialized insists upon with its retailers
results in a less-free market. In the idealized case, a specialized
retailer would have the flexibility to lower the price to increase
sales. While legal, the arrangement prevents prices from moving
freely and adjusting to demand. It also makes life a lot tougher
for the retailer. It's a good deal for specialized, though.

I believe that this is a case of a larger economic entity (specialized)
forcing a sales arrangement on the smaller retailer. This whole
situation is less important than it might be due to the large number
of bike&equipment manufacturs, which probably result in Specialized
being forced to set a reasonably 'fair' price.

Greg

	Kevin, I think you're missing one key difference between what
	is "right" (and I think you and I basically agree) and what
	Specialized, and others, are doing.

	Imagine a manufacturer XYZ Products and a couple of retailers
	A and B.  (pretty imaginative, eh?)  XYZ sells widgets to
	retailers for $100.  Any retailer should be able to buy those
	widgets for the same terms.  Now suppose the list price on the
	widgets is $150.  Retailer A decides to sell for $150, no less.
	Retailer B decides to sell for $140, $125, maybe even $95 to
	get people in his store.  Fine, both A and B have decided how
	to run their business.  Maybe one makes more money than the 
	other, maybe not.  A probably tries to emphasize service, etc.

	The problem is when XYZ refuses to sell to B because of B's
	resale pricing policy.  You're right that B can resell anything
	he has for whatever he wants, but if he can't buyany more it
	doesn't make much difference.  

	If one manufacturer (Specialized) in an industry does this, big
	dael, buy from someone else.  If virtually all do it (like audio
	several years ago), it's clearly price fixing at the consumer's
	expense.  When does it cross the line?  The only way to control
	it is to allow noone to follow these policies.

	chris