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Old February 6th, 2011, 15:52   #40
a.k.a. ssmm
Join Date: Oct 2010
Originally Posted by rustysniper View Post
Economy of scale also applies to importation. Canadian retailers can never do the volume to purchase at prices which will allow them to compete with US and Asian markets. Couple this with the high costs of bringing a product to the Canadian market and strict importation laws...we do not have the ingredients for low pricing.

Any retailer will tell you that he wants to sell his product at the MOST competitive prices he can.....but in turn they must do the volume in order to to make up for the reduced margins.. If they don't do the volume they can't keep the doors open.

I knew some day that that MBA would pay
Economies of scale has nothing to do with importation, it may do a lot with firms exporting but not imports. Lets say for your sake that demand really is low, Canadian retailers would have to lower the amount they supply/import and thus lower the prices to match the market equilibrium price to keep up the volume. If they cannot cover the costs then it is no longer profitable to stay in business, which means the efficiency scale of the market is small and there should be very few retailers.

As you can see low demand means less retailers but lower prices, I say that there is high demand in Canada for Airsoft, and not just based on the fact that Wal-Mart and Canadian Tire sell them in every one of their stores. Focusing on "good" models, very few retailers are allowed to import them legally into the country meaning a low supply. Simple demand and supply dictates that low supply leads to high demand. Where there is high demand there will be high prices regardless of volume. As well as the fact that there are naturally few retailers they could easily corner the market and jack up the prices.
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