It's like the senior discount on a grander scale. Your typical old person on a fixed income can pay less than someone still working, so you split the market into two segments and do a pricing strategy that gives maximum profit in both - you keep the high margin on the young but increase the quantity the old can afford more than the price cut. You keep people from moving between the segmented markets by setting an age break.
Same goes for the international vs. the American market - there's no way you're going to be able to charge $150 for a textbook, $200 for a Windows license, or thousands a month for HIV meds in Africa and get any reasonable number of customers. Since the marginal cost of both is low, companies can cut their prices to close to the amount it costs them to make a unit and make it up on the massively increased volume.
Any time you segment a market like this you have to keep it apart somehow. Sometimes it's natural - a senior discount seems fair and few will make false claims of being elderly - but sometimes it's not. Clearly everyone in the US would prefer to pay 95% less for their medication than they are, but the pharmaceuticals wouldn't like it and probably wouldn't be able to survive on that. So they make it very difficult to do any kind of arbitrage.
If you're an individual you can probably get away with it with a lot of effort (I got a lot of Indian textbooks (Identical to US versions) because I was desperate and put a lot of work into finding someone who wouldn't refuse to ship to the US.) If you try to break the segmentation on any kind of scale you'll get a legal smackdown. Maybe it's completely legal, but it's hard to prove, and the possible losses are so great most companies will go to war over this.
I guess that the irony is that third-world wages are allowed to compete more often than third-world prices. Maybe there's something valid to that - if
HIV meds cost everywhere what they cost in the cheapest country, then there would be no new ones, or at least an end to wildly cheaper versions - but that's the grievance.
(Don't know if third-world is the right term, so let me just say when I say that I mean "places significantly less economically developed than America")
If the american's could get medicines, books, degrees at much lower prices, maybe medical research would not be so costly in the first place... The cost of medical research is primarily composed of paying doctors, nurses, lawyers, politicians, clerks, programmers etc artificially inflated salaries so that they can afford education and healthcare. Maybe these corporations will drop the price of healthcare and education to compensate for lower incomes as more people become unemployed by competing with other countries.
Same goes for the international vs. the American market - there's no way you're going to be able to charge $150 for a textbook, $200 for a Windows license, or thousands a month for HIV meds in Africa and get any reasonable number of customers. Since the marginal cost of both is low, companies can cut their prices to close to the amount it costs them to make a unit and make it up on the massively increased volume.
Any time you segment a market like this you have to keep it apart somehow. Sometimes it's natural - a senior discount seems fair and few will make false claims of being elderly - but sometimes it's not. Clearly everyone in the US would prefer to pay 95% less for their medication than they are, but the pharmaceuticals wouldn't like it and probably wouldn't be able to survive on that. So they make it very difficult to do any kind of arbitrage.
If you're an individual you can probably get away with it with a lot of effort (I got a lot of Indian textbooks (Identical to US versions) because I was desperate and put a lot of work into finding someone who wouldn't refuse to ship to the US.) If you try to break the segmentation on any kind of scale you'll get a legal smackdown. Maybe it's completely legal, but it's hard to prove, and the possible losses are so great most companies will go to war over this.
I guess that the irony is that third-world wages are allowed to compete more often than third-world prices. Maybe there's something valid to that - if HIV meds cost everywhere what they cost in the cheapest country, then there would be no new ones, or at least an end to wildly cheaper versions - but that's the grievance.
(Don't know if third-world is the right term, so let me just say when I say that I mean "places significantly less economically developed than America")