Mobile Phones and Competition – Econlib

Here’s a popular shopping tip that I suspect most readers won’t take advantage of: Right now, Apple is discounting the iPhone in China. But I don’t bring that up because I’m actually hoping to influence someone’s shopping behavior. I find it remarkable for other reasons.

It may seem strange that I would find it remarkable that a company offered a discount on one of their products. Isn’t that something companies do all the time? Not in the case of Apple. They rarely – almost never even – sell their devices at a discount. Take for example the ‘Black Friday’ shopping experience in the United States, which usually kicks off the holiday shopping season leading up to Christmas. Many cell phone companies offer huge discounts during this event. In fact, in recent years, these holiday discount prices appeared well before Black Friday and lasted well past Thanksgiving weekend. Google and Samsung often offer their phones at significantly lower prices, as well as bundle deals and improved trade-in values ​​for older phones.

Last yearFor example, Google removed $200 from the price of their high-end flagship phone, the Pixel 8 Pro, even though it had only been released a month earlier, and took $400 off the price of their foldable phone/tablet hybrid, the Pixel Crease. Meanwhile, Apple only had promotions for the actual Thanksgiving weekend, and instead of discounting their products, they sold items at full price, but certain purchases included an Apple gift card that could be used to purchase more Apple products to buy. So if you buy a new Apple TV 4K, you’ll also get a $50 gift card to Apple.

So why is Apple now offering their top-of-the-line iPhones at discounts equivalent to hundreds of dollars in China, while offering nothing of that kind in the United States during the typical holiday discount shopping event? It’s because Apple is in China confronted The fierce and increasing competition from companies like Huawei – competition it does not face in the US market because the US government has banned these companies from competing in the US market on transparent ‘national security’ grounds. (Although not as thin as the case may be pointed out by Jon Murphy, where protectionists cited “national security” as a reason to ban not Chinese electronics, but Chinese garlic.) As a result, Chinese consumers can get iPhones at better prices than U.S. consumers because the Chinese government allows more competition in the market for cell phones than the US government allows. And it seems that this move by Apple has been successful, just like Chinese consumers responded positive towards the price reductions. It’s just a shame that American consumers don’t get the same benefits from this competition.

I have written for about how the Justice Department’s claim that companies like HTC and Microsoft are failing to compete with Apple in the United States because of “entry barriers” is prima facie absurd. To summarize, my claim was that it is absurd to say that Microsoft, which had been selling smartphones for years and had an established user base of millions and millions of customers long before the iPhone existed, failed to compete with the iPhone because Microsoft faced “barriers to the inside.” But this does not mean that barriers to entry exist in any way in the mobile phone market. However, the main barriers that currently exist are caused by government regulations. Before the government tries to take the splinter out of the market, it must first turn its attention to the plank created by its own policy.