I bought a service at an excessive price, so I’m defecting? What?
If the delivery services are taking too much, they’ll be outcompeted. Given your description, Slice is not some sort of hero, it’s a vertically integrated competitor doing exactly what the free market would expect to happen.
In any case, I reject the notion that “giving a company too much money” could in any sense be mapped to the game theoretic notion of defection. That’s not how game theory works, and it’s not how markets work.
If GrubHub was misadvertising their costs or declaring that 90% of the price went to the restaurant, and it didn’t, then sure. But that’s not my impression.
GrubHub offers a service for a price. In the back, it negotiates with the restaurant to push down prices. This is good and proper. The free market drives margins to zero; the point of it is to drive margins to zero. If you don’t want that, then don’t sell on GrubHub?
“But all my competitors are on GrubHub and I can’t compete!” Yes? Were you under the impression that you were owed a business model? A business is either profitable or it isn’t. If it is not profitable, then it morally shouldn’t ought to exist; the market is indicating that the business is a waste of society’s limited resources. Propping up a business that is unprofitable is more defection to me than anything GrubHub does.
I agree the OP didn’t do a very good job of explaining why what’s happening isn’t just the free market doing what it’s supposed to do. But the 20% fee seems to be a strong clue that there’s some kind of market failure happening. This Quora answer suggests that the culprit is economy of scale due to network effects, which gives the online intermediaries market power. This seems pretty plausible to me.
(I don’t have an opinion on the OP’s suggestion of people independently refraining from using these services, but it seems worth pointing out there’s at least a large justifiable suspicion that what’s happening isn’t good and proper.)
If it is not profitable, then it morally shouldn’t ought to exist; the market is indicating that the business is a waste of society’s limited resources.
This seems much too strong: it e.g. suggests that no non-profits should exist. Profitability and overall benefit to society are two very different things.
Non-profits are “profitable” in the limit sense of a profit of zero. Non-profits with negative profit cannot exist and, in fact, generally quickly cease to.
There are problems with the equation “profit=worth”, but it holds to a first approximation. The free market is vulnerable to collusion, fraud and outright value hijacking, but those are all manipulations and divergences of the baseline, which is “1 money = 1 unit of caring.”
I usually tend to assume that the markets, being the dominant optimization power in society, are the “authority” on value, because they generally function to model society’s revealed preferences. A thought that often comes to mind is “If you didn’t want X, why did you allow your markets to fall into an X attractor?” I suspect people tend to model markets as cosmic laws, whereas I think of them more as highly powerful mechanical contraptions that require maintenance. Or maybe as a dev I just model everything as software.
I bought a service at an excessive price, so I’m defecting? What?
If the delivery services are taking too much, they’ll be outcompeted. Given your description, Slice is not some sort of hero, it’s a vertically integrated competitor doing exactly what the free market would expect to happen.
In any case, I reject the notion that “giving a company too much money” could in any sense be mapped to the game theoretic notion of defection. That’s not how game theory works, and it’s not how markets work.
If GrubHub was misadvertising their costs or declaring that 90% of the price went to the restaurant, and it didn’t, then sure. But that’s not my impression.
GrubHub offers a service for a price. In the back, it negotiates with the restaurant to push down prices. This is good and proper. The free market drives margins to zero; the point of it is to drive margins to zero. If you don’t want that, then don’t sell on GrubHub?
“But all my competitors are on GrubHub and I can’t compete!” Yes? Were you under the impression that you were owed a business model? A business is either profitable or it isn’t. If it is not profitable, then it morally shouldn’t ought to exist; the market is indicating that the business is a waste of society’s limited resources. Propping up a business that is unprofitable is more defection to me than anything GrubHub does.
I agree the OP didn’t do a very good job of explaining why what’s happening isn’t just the free market doing what it’s supposed to do. But the 20% fee seems to be a strong clue that there’s some kind of market failure happening. This Quora answer suggests that the culprit is economy of scale due to network effects, which gives the online intermediaries market power. This seems pretty plausible to me.
(I don’t have an opinion on the OP’s suggestion of people independently refraining from using these services, but it seems worth pointing out there’s at least a large justifiable suspicion that what’s happening isn’t good and proper.)
This seems much too strong: it e.g. suggests that no non-profits should exist. Profitability and overall benefit to society are two very different things.
Non-profits are “profitable” in the limit sense of a profit of zero. Non-profits with negative profit cannot exist and, in fact, generally quickly cease to.
There are problems with the equation “profit=worth”, but it holds to a first approximation. The free market is vulnerable to collusion, fraud and outright value hijacking, but those are all manipulations and divergences of the baseline, which is “1 money = 1 unit of caring.”
I usually tend to assume that the markets, being the dominant optimization power in society, are the “authority” on value, because they generally function to model society’s revealed preferences. A thought that often comes to mind is “If you didn’t want X, why did you allow your markets to fall into an X attractor?” I suspect people tend to model markets as cosmic laws, whereas I think of them more as highly powerful mechanical contraptions that require maintenance. Or maybe as a dev I just model everything as software.