Price Gouging

[nw843x]

:mad:This is a prime example of bad business. Bombardier has told its USA dealers to stop selling their products to Canadians who cross the border for a huge price savings. $3000 dollars is a huge difference in price, and the most asinine part of this whole deal is that when the Canadian dollar was at 70 cents to the US dollar, nobody said (rule8) about Americans going north to purchase at a similar discount. :mad:

http://www.canada.com/vancouversun/news/business/story.html?id=2d9821b2-a563-479b-b18e-df7ff1c96188

[Rob Lister]

:mad:This is a prime example of bad business. Bombardier has told its USA dealers to stop selling their products to Canadians who cross the border for a huge price savings. $3000 dollars is a huge difference in price, and the most asinine part of this whole deal is that when the Canadian dollar was at 70 cents to the US dollar, nobody said (rule8) about Americans going north to purchase at a similar discount. :mad:

http://www.canada.com/vancouversun/news/business/story.html?id=2d9821b2-a563-479b-b18e-df7ff1c96188

I've got to admit that it is an interesting story. I'm frankly surprised that it is legal...though I can think of no law that forbids it. I wouldn't call it Price Gouging though. It's clearly market fixing. Then again, one could view it as a supplier enforcing sales territories. Not sure what to think of it.

[Puppycow]

Aren't there other snowmobile makers? My suggestion is vote with your wallet.

[Raskolnikov123]

Yeah, whats silly about this is that the easiest way for the manufacturer to standardize the price between US and Canadian dealers is to charge the US dealers a higher wholesale price. That gets them off the hook for having to figure out which American customers are really Canadians sneaking across the border at night with a flashlight, a dufflebag containing jeans, a cowboy hat, and an American flag t-shirt saying "these colors don't run", and a sixpack of Budweiser (not for actual drinking, but as part of the costume).

My hunch is that their contractual agreements between different dealers have them over a barrell, requiring them to not allow different dealers to undercut each other too much, but forbidding them to sell to different dealers at different wholesale prices. Or something.

[nw843x]

**uses Barney Gumble voice**
"It begins ....... "

http://www.cbc.ca/money/story/2007/09/26/classaction.html

It still boggles my mind that there can be such a difference in prices for the exact same item.

[69dodge]

I don't understand this whole exchange rate business. Who has decided that Canadian dollars are now officially as valuable as US dollars?

It seems to me that a Canadian dollar is worth what a Canadian dollar can buy. If it can't buy as much car as a US dollar can buy, by definition it isn't worth as much as a US dollar.

Or, to put it another way, why would anybody who owns US dollars be willing to exchange them for an equal number of Canadian dollars, if they can't then use those Canadian dollars to buy as much stuff as they could have bought with their US dollars? Apparently, people are willing to do this, which is why the exchange rate is what it is. But I don't understand why they are willing.

[balrog666]

I don't understand this whole exchange rate business. Who has decided that Canadian dollars are now officially as valuable as US dollars?

It seems to me that a Canadian dollar is worth what a Canadian dollar can buy. If it can't buy as much car as a US dollar can buy, by definition it isn't worth as much as a US dollar.

Or, to put it another way, why would anybody who owns US dollars be willing to exchange them for an equal number of Canadian dollars, if they can't then use those Canadian dollars to buy as much stuff as they could have bought with their US dollars? Apparently, people are willing to do this, which is why the exchange rate is what it is. But I don't understand why they are willing.


But they can as measured in gold. Or silver. Or tin. Or lead. Or uranium. Or oil. Or orange juice. Or wheat. Or bananas. Or ...

Just not certain meaningless brands of crap.

[Corsair 115]

I don't understand this whole exchange rate business. Who has decided that Canadian dollars are now officially as valuable as US dollars? You may wish to check the exhange rates, the Canadian dollar is more valuable than the U.S. dollar.

The Canadian dollar closed on Friday at an all-time high against the U.S. dollar of $1.0704, or in other words the U.S dollar was worth only $0.9342 Cdn. Five years ago the U.S. dollar was worth over $1.57 Cdn.

Reasons generally cited for the rise of the Canadian dollar: higher interest rates here than in the U.S.; generally good economic performance over the last several years; a government posting budgetary surpluses for quite a few years in a row now; the rise in commodities prices, especially oil (Canada has many of the commodities which are in demand); lately, the credit crunch in the U.S. caused by the subprime mortgage problems and the subsequent decline in housing (there is no subprime crisis or housing slump in Canada thanks to different regulations and banking practices); and lastly a continued weakness in the U.S. dollar.

You put all those things together and international investors deem Canada to be a generally better place to put their money than the U.S., and that judgement is reflected in the value of the dollar.

[UserGoogol]

I don't understand this whole exchange rate business. Who has decided that Canadian dollars are now officially as valuable as US dollars?

It seems to me that a Canadian dollar is worth what a Canadian dollar can buy. If it can't buy as much car as a US dollar can buy, by definition it isn't worth as much as a US dollar.

Or, to put it another way, why would anybody who owns US dollars be willing to exchange them for an equal number of Canadian dollars, if they can't then use those Canadian dollars to buy as much stuff as they could have bought with their US dollars? Apparently, people are willing to do this, which is why the exchange rate is what it is. But I don't understand why they are willing.

One reason might be that there's a certain amount of speculation in the currency market. Thus, even if the purchasing power of the dollar hasn't really changed that much, people might think it'll change in the future, and thus would like to buy their Canadian dollars now before the dollar gets even weaker.

Also, what Corsair said. There's more to money than just being a store of value.