Comment by robocat
17 hours ago
I always wonder where consumer surplus fits into arguments about profit.
Although in this particular situation clearly the consumer surplus wasn't enough to keep consumers buying Del Monte products.
https://en.wikipedia.org/wiki/Economic_surplus
If we measure consumer surplus as a percentage, how would it compare to business profits as a percentage?
Edit:
Nobel laureate William Nordhaus studied the historical data of the U.S. economy and concluded that innovators and corporations capture only a tiny fraction of the total social value they create. Consumers capture ~98% of the value in the form of surplus. Producers capture ~2%.
I think that notion is mostly meaningless to actual humans.
I'm not sure I understand your point? If you are private equity and do a leveraged buyout, the company is priced as if you could extract the current value of the company out of the acquisition. As if the company were a consumable basically, because that's how you're going to pay off the loan. If consuming the company requires mistreating customers (getting rid of consumer surplus), then that's what's going to happen. The way you're talking about this sounds like the cause is a lack of consumer surplus when that's just a symptom of a leveraged buyout.
Also Nordhaus being a Sveriges Riksbank price laureate tells you how silly and meaningless the Sveriges Riksbank price in economics is. His work on climate change is so bad it's embarassing.