You keep applying far too simplistic ecomic views.
"But really what they would do is check the prices set by other sellers and price based on that data, because it's a lot easier. "
If that was all they did, they would either always be sold out or never sell any. They all adjust their prices to what people will pay and compare that to their cost. They then determine if the total profit will be higher by lowering the price and increasing sales at a reduced profit per item.
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"zenmaster wrote:
NewEgg knows that the demand for the Q6600 will be dropping since smart shoppers know a price cut is coming July 22nd. "
"Based on the law of supply and demand the price would drop, assuming no shift in the supply curve. The new equilibrium price and quantity would be lower."
Again, this is vastly over simplified. That assumes that NewEgg wishes to maintain the same level of sales. If that level of sales would exceed their inventory, it would not make sence to do so.
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"It appears that since Newegg's new price is considerably lower now, they have determined that their price was far to high in relation to the new equilibrium price, based on the reduced demand, and they weren't selling any/enough based on their price in relation to that of their competition. So they lowered their price, to what appears to be below the equilibrium price, based on a quick search of suppliers prices for the Q6600. "
Again, far too simple analysis. There can be a myriad of reasons for the pricing. One - Customer Complaints. Two - Realization that reduced sale of one item may lead to loss in sales of other items. Three - They received additional stock or perhaps arranged for early shipment of cheaper CPUs.
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"It appears that since Newegg's new price is considerably lower now, they have determined that their price was far to high in relation to the new equilibrium price, based on the reduced demand, and they weren't selling any/enough based on their price in relation to that of their competition."
So, at least we know agree that NewEggs's price does effect consumer demand for their product. So we now have settled demand.
We must now look at Supply.
Unlike in books, there is no "CPU" fairy that magically restocks inventory each time one is sold. For "NewEgg" to get more CPUs, they must buy them from somebody else. The "Somebody" in this case is generally large distributors or likely Intel themself since their prices are so good. Now to restock, since it is not done by the CPU fairy, is going to be very costly. They are not going to buy 1000 CPUs for $400 Ea and Sell for $500 each is they can only sell 500 CPUs prior to the price dropping to $266 and a forced loss of over $100 per CPU. Hence their supply is very limited. It matters little to them how many Intel has in stock or anybody else. The need to manage the supply they own and control it with the price they set.
In none of your discussion about the price NewEgg would charge do you consider the cost of acquistion, profit, loss, overhead, etc.. etc... etc...
Luckily my primary Economics professor in College was a sr memory of the Federal Reserve Board under the Nixon administration and really understood Economics from a real world perspective.
As another professor taught, "If its good in theory but not in Practice then its not good theory." It's all about the practice. Everything must be accounted for.