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LOWER SUBSIDY = LOWER PRICES? AMAZING!
February 14, 2007
Don't Mess With Taxes brings us a shocking story: the elimination of the tax credit for Toyota hybrid cars has reduced demand for the Prius. As a result, prices are coming down!
This could lead to a radical new approach to pricing hybrid cars: setting the price at what people will pay for them. It's a bitter pill, but desperate times are leading Toyota to desperate measures.
Sellers of other subsidized products should watch this development closely. While it seems inconceivable now, in theory people will get tired of paying $2 or $3 out of every gas fill to keep excess ethanol plants running. As a dire contingency plan, they may have to resort to finding a way charge people for ethanol the amount they would pay for, say, gasoline.
This theory could also apply to the higher education industry. It appears to the untrained eye that every initiative to make college "more affordable" was immediately absorbed by higher tuition prices. Maybe someday we'll find out if the ultimate way to make college more affordable is to eliminate the rat's nest of tax credits, deductions and tuition subsidies for the college industry.
As a last resort, of course.
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Comments
"As a last resort, of course"
Of course.
Can't have this whole "common sense" silliness take the place of tax subsidies, can we?
Very good post.
Posted by: hgstern | February 14, 2007 2:44 PM