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Is Amazon.com Regressive?

Alex Tabarrok has a neat post on the economics of really expensive DVD cables.

To get the best performance you need an HDMI cable which must be purchased separately (itself a bit of a mystery since almost every blu-ray is going to be attached to a digital tv). The price difference among brands of HDMI cable are bizarrely large - you can easily spend as much on Monster cable, the brand leader, as on the player itself yet at the same time you can buy decent HDMI cable for virtually nothing at Amazon...I knew cables were a ripoff yet I could not find reasonably priced cables at Best Buy, Radio Shack, Target or even Wal-Mart. Ordinarily, we would expect competition to push prices down but in this case it seem as if the mere existence of Monster is anchoring high prices everywhere but online.

The only thing I'd add is that there's a certain sense in which online shopping is a wealth transfer from the poor to the rich, the uneducated to the educated, and the old to the young. The fact that online shopping is second nature for me, and thus it would never even occur to me to purchase a DVD player at a brick-and-mortar store where I couldn't compare prices and reviews on every product in every category, means I get better deals than people less comfortable with Amazon.com.

By Ezra Klein  |  June 12, 2009; 11:02 AM ET
 
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Comments

I've thought about this a bit too (not too hard, but I have thought about it). It would never occur to me to shop for such things at a brick and mortar place -- the last electronics item I bought in that was was my son's Xbox 360. Best Buy does have a nice recycling program for electronics items that I make use of when I know I'm going to be driving near a Best Buy.

Posted by: bdballard | June 12, 2009 11:24 AM | Report abuse

It is not so much the fact that things are cheaper (excluding postage) on the internet as that they bypass state and local sales taxes. This seems to me wrong -- although like everyone else I take advantage of it. Also, we are all going to end up paying for it one way or another.

Posted by: harold3 | June 12, 2009 11:58 AM | Report abuse

Monster has quite a little niche going there, eh? First it was speaker cables, which are about 6 gauge when one can't tell the difference for anything larger than about 18 gauge.

Then it was RGB video cables, where one can at least make something of an argument for the larger cable size over longer lengths.

But HDMI? To get any HDMI cable certified you have to meet specs regarding data loss. But the thing is digital. The data gets to the other end or it doesn't. If it does, you're good to go. If not, the cable won't get certified. Video/audio quality don't depend on signal strength so long as the data gets there.

But the brick and mortar stores have done really good business for themselves pushing the more expensive Monster cables for all of this stuff. Why stop now?

Posted by: J-NC | June 12, 2009 12:02 PM | Report abuse

Dude, that post is by Alex Tabarrok, not Tyler.

Posted by: Selfreferencing | June 12, 2009 12:12 PM | Report abuse

Same deal with GPS maps. You buy the hardware, maybe $150 and up, and then you have to spend an additional $100+ for digital maps, which are free public-domain data translated to the manufacturer's proprietary format.

Posted by: tl_houston | June 12, 2009 12:18 PM | Report abuse

I made the mistake of purchasing an HDMI cable at Best Buy when I needed one. A couple days thereafter, I saw that I overpaid by a factor of around 50. I have not been back to Best Buy since. Given Circuit City's fate, I suspect it won't be long for Best Buy.

Posted by: Dellis2 | June 12, 2009 12:54 PM | Report abuse

Because time preference matters. If you spend $200 on Blu-Ray player and want to watch your new Blu-Ray disc you might blanche at waiting a week to get a $5 cable versus going out and getting a $15-20 cable today. Radio Shack exists for a reason.

Posted by: endaround | June 12, 2009 1:01 PM | Report abuse

I don't get how being able to buy cheaper cable online is regressive. I'm probably missing something obvious, but eh... isn't the retailer offering the best price the least regressive?

It's not Amazon's fault that Best Buy and the rest are engaging in the boondoggle.

Posted by: roquelaure_79 | June 12, 2009 1:26 PM | Report abuse

I think it's about a different kind of time preference -- not so much the few days you wait as the extra hour or two you spend getting the cable separately. You put the purchase on your list of things to do wen you get home, you figure out which online retailer has the best price, you read some reviews to make sure the low-price model is what you want and will do as good a job. When the thing arrives, you collect the package, open it up, discard/recycle the egregious outer corrugated packaging. Or you just pay more and get the damn thing over with. You see a similar situation with cellphone chargers and other accessories -- if you spent an hour or two online you could get them for a fraction of the price at the store. But is that really what you want to spend your leisure time doing?

The one thing it has almost nothing to do with is some price umbrella carved out by a more-money-than-sense highend vendor.

Posted by: paul314 | June 12, 2009 2:20 PM | Report abuse

These days, it almost never makes sense to purchase any of my computer or home audio cables or adapters from anywhere but monoprice.com. I've bought a bunch of stuff from them, and it's all been quality goods at ridiculously cheap prices. I did buy an Olevia HDMI switchbox from Woot that included three HDMI cables, as much for the cables as the switchbox, which I don't need yet.

One of my favorite pages on Amazon is for a Denon Ethernet cable that sells for $500 (not a typo!). The comments are hilarious.

Posted by: negrino | June 12, 2009 2:33 PM | Report abuse

I worked in retail at a small Electronics store while I was in college so I have a little experience with this issue. Don't blame excessive cable prices on Monster cables. Blame it on Best Buy's business model.

Best Buy gets people in the door with ridiculously low prices on high end items. Cameras, printers, computers, and anything else you can put on the front page of a newspaper insert. These are loss leaders. To break even they charge through the nose on less sexy stuff.

My tiny little store beat the pants off them on cables, and did pretty well in print cartridges, mostly because we didn't bother stocking the really cool stuff. We had a few PDAs, but no printers. Occasionally a webcam. Maybe a few of last year's computer game. We carried Mac OS X, but we sold it at a loss.

Posted by: NickBenjamin | June 12, 2009 2:46 PM | Report abuse

The problem is, education is regressive. Education and income are in positive feedback, meaning that anything that requires knowledge is, perforce, regressive.

Posted by: Ulium | June 12, 2009 5:30 PM | Report abuse

HDMI cables? You have no clue. Take a look at high end loudspeaker cables sometime. Some people apparently drop more than you will spend on audio equipment in your entire life on a pair of speaker cables.

Monoprice is good, and so is bluejeancable.com, where I got mine. I'm especially fond of blue jeans because they took on Monster's legal intimidation. Google up the letter (monster and bluejeans as search terms will do it); it's a blast.

Posted by: student16 | June 14, 2009 1:04 PM | Report abuse

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