# Darmani comments on Extortion beats brinksmanship, but the audience matters

• I’d really appreciate a more rigorous/​formal/​specific definition of both. I’m not seeing what puts the Walmart example in the “extortion” category, and, without a clear distinction, this post dissolves.

• I think the distinction is, from the point of view of the extortioner, “would it be in my interests to try and extort , *even if I know for a fact that cannot be extorted and would force me to act on my threat, to the detriment of myself in that situation?”

If the answer is yes, then it’s extortion (in the meaning of this post). Trying to extort the un-extortable, then acting on the threat, makes sense as a warning to other.

• I see. In that case, I don’t think the Walmart scenario is extortion. It is not to the detriment of Walmart to refuse to buy from a supplier who will not meet their demands, so long as they can find an adequate supplier who will.

• I’m think of it this way: investigating a supplier to check they are reasonable costs $1 to Walmart. The minimum price any supplier will offer is$10. After investigating, one supplier offers $10.5. Walmart refuses, knowing the supplier will not got lower, and publicises the exchange. The reason this is extortion, at least in the sense of this post, is that Walmart takes a cost (it will cost them at least$11 to investigate and hire another supplier) in order to build a reputation.

• Okay. I think you’re saying this is extortion because Walmart’s goal is to build a reputation for only agreeing to deals absurdly favorable to them.

If the focus on building a reputation is the distinguishing factor, then how does that square with the following statement: “it is not useful for me to have a credible reputation for following up on brinksmanship threats?”

• Because a reputation for following up brinksmanship threats means that people won’t enter into deals with you at all; extortion works because, to some extent, people have to “deal” with you even if they don’t want to.

This is why I saw a Walmart-monopsony (monopolistic buyer) as closer to extortion, since not trading with them is not an option.