[C320-list] Recent traffic

[Rick Sonntag]

Raising rates to compensate for reduced demand is a guaranteed way to go
out of business.

While I haven't noticed that happening, I have seen that rates do not drop
as much as you might expect from the reduced demand. And there is good
reason why the supply-demand curves that we learned in Economics 101 are an
overly simplistic model. That's because when the classical intersection of
those curves falls below the cost of doing business, then businesses will
fold, reducing the supply and raising the price at which supply and demand
intersect. This process of contraction of the supply will continue until
the intersection point allows a sufficient profit margin to incent marinas
to stay in business.

Much as we hate the high marina rates, the waterfront property upon which
they sit is generally valuable, environment is hostile (moisture and salt
lead to high maintenance), and it can be costly to deliver supplies and
utilities to waterfront locations. So as demand reduces, it is more likely
that supply would reduce instead of prices falling. I believe that is what
we are seeing.

I'm not an economist, but I enjoy pretending. My lame claim to fame: My dog
once peed on Ben Bernanke's daughter's sleeping bag. (Ben and I remained
friends nonetheless.)

--Rick

On Thu, Oct 29, 2015 at 12:09 PM, John Meyers <jcmeyers7 at gmail.com> wrote:

> Graeme, (and anyone else reading these)
>
> I love the relationship between micro and macro economics, but not as much
> as I love sailing.  When a business stops they reduce the supply and buyers
> that are still out there look to other business and increase demand on
> their offerings. Sort of like wind, sails, ballast, and heel. They all come
> together to equilibrium. When the  wind speed and/or
> wind/boat direction(s) change so does the heel.
>
> Life is like that too. Change in life style, income, and whole lot of other
> factors change the equilibrium in people too. We must make an adjustment or
> we capsize. A boat that is forgiving can take the change. People too.
>
> John
>
>
> On Thu, Oct 29, 2015 at 11:51 AM, Graeme Clark <cg at skyflyer.co.uk> wrote:
>
> > John
> >
> > You’d hope so, but it seems these days the reaction of businesses that
> are
> > not getting the demand on their product or service that they once did, is
> > to up the rate to the remaining customers in order to try and maintain
> > total revenue, rather than lower the price to attract business.
> Eventually
> > many will price themselves out of business.
> >
> > It always amazes me that the same product with the word “marine” or
> > “aviation’ in front of it costs several times the “auto” variant.
> >
> > Graeme
> > Jaskar, #366
> > Falmouth, England
> >
>