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Why does Canada have lower selections and is more expensive than the US?


shalab
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I am trying to understand the economics - most of Canada lives within 50 miles of the USA border. So, this is definitely not due to supply chain issues. However, when I look at amazon for simple things like cell phones, orange juice etc., the cost in Canada is higher than the US. The selections are also lower.

 

Canada being a richer country, I find this interesting. It also seems competition in Canada is not what it is in the USA. Is it because of protectionist policy or border adjustment taxes or something else?

 

Search for windows phone in US:

 

https://www.amazon.com/s/ref=nb_sb_noss_2?url=search-alias%3Daps&field-keywords=windows+phone+unlocked

 

Search for windows phone in Canada:

 

https://www.amazon.ca/s/ref=nb_sb_noss_1?url=search-alias%3Daps&field-keywords=windows+phone+unlocked&rh=i%3Aaps%2Ck%3Awindows+phone+unlocked

 

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" most of Canada lives within 50 miles of the USA border. So, this is definitely not due to supply chain issues."

 

Right there you have a large chunk of your desired explanation.

 

With the vast majority of the population living on a straight line of around 5,000 km, logistics requires shipment over long distances in many instances.

 

Shipment across borders is also not free. I can order something online from California and my shipping cost will be higher than for anyone in the U.S. Then if my shipment gets inspected by Canadian customs, they will charge me a $9.95 fee + federal and provincial sales taxes.

 

Cardboard

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Whenever something doesn't make logical sense it is a good bet that government(s) are the cause.  My guess is that the imaginary line between the two gang territories (called a "border") is the reason for the inefficiencies in the market that you are noticing.

 

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There used to be a number of large US retailers who simply would not ship to Canada.  I'd run into this all the time with camping equipment and find it pretty frustrating.  Maybe that's changed now and you just have to navigate duties/taxes/exchange.  You also used to routinely get screwed on "brokerage charges", but again I haven't ordered from the States for a while so may be smoother now.

 

Whenever I look at Amazon in the US or in Europe I'm a little frustrated at how much more limited our online options are in Canada. I have a good friend who came from the US who loves it here, with one exception: online shopping.

 

As for Canada being richer than the US.  The OP is having fun making hay with this idea, but obviously it's only true in a very narrow sense.  The US market and wealth is literally an order of magnitude bigger.  We don't have free flow of goods across the border, so you'd expect the US to be more competitive.

 

I think the US is pushing Canada to allow more duty-free trade, particularly online.  But the Canadian retail lobby is pretty strongly opposed for obvious reasons.

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Average Canadian (50th percentile) is richer than average American in income and net worth. I am guessing this is also true for an average Australian, average French person, average west europian. Canada has done a smart thing by giving visas to a lot of wealthy people from HongKong, China and some from India. Many of the smarter ones ultimately land in the USA.

 

 

Don't get me wrong, USA is still the place to be for people with ambition, brains, passion or ideas. In terms of human potential, don't think any other country comes close. It is also a giant economy which is probably 15 times the size of Canada and 5-6 times the size of Germany. However, when it comes to the person in the middle (50th percentile) or below - it is not necessarily the best place on the planet.

 

Despite the recent hoopla on immigration, USA is probably the most open country on earth - I just read this today on quora.

https://www.quora.com/I-recently-got-PR-acceptance-for-Canada-and-my-brother-is-saying-I-should-not-come-What-should-I-do

 

However, the great thing in Canada is that an average person ( e.g:, a loblaw union worker, truck driver or janitor ) can accumulate more wealth and income. Having friendly ties with the USA also helps a lot - most of the innovation from USA easily percolates, dont need to spend on defense or border security, citizens have good opportunities for education and then employment in USA (most multinational USA firms consider Canadian colleges on par with US colleges), the huge market is open for all Canadian citizens, companies to invest, participate in.

 

...

 

As for Canada being richer than the US.  The OP is having fun making hay with this idea, but obviously it's only true in a very narrow sense.  The US market and wealth is literally an order of magnitude bigger.  We don't have free flow of goods across the border, so you'd expect the US to be more competitive.

 

...

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I would guess you could eliminate almost the whole difference by just getting rid of the de-minimus threshold or even lowering it to point where its cost of collection = taxes revenue.

 

Basically the Canadian government has a policy of keeping frictions at the border on purpose in order to protect Canadian retailers. Its essentially government policy.

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Average Canadian (50th percentile) is richer than average American in income and net worth. I am guessing this is also true for an average Australian, average French person, average west europian. Canada has done a smart thing by giving visas to a lot of wealthy people from HongKong, China and some from India. Many of the smarter ones ultimately land in the USA.

 

Yes, I understand that you're talking about median wealth,  But why are you surprised at differences in the retail landscape based on this?  There's less competition and higher prices  because the border isn't free-flow and it's a much smaller market by both population and aggregate wealth.

 

Do visa programs for the wealthy have a dramatic effect on median income?  And do you have any data for the bolded text above?

 

I think you're demonstrating your credulity by drawing conclusions about immigration from a single answer on Quora. The US is quite exceptional in many regards, but the numbers would suggest that it is likely not the most open country on Earth.

 

https://www.npr.org/2014/10/29/359963625/dozens-of-countries-take-in-more-immigrants-per-capita-than-the-u-s

 

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I would guess you could eliminate almost the whole difference by just getting rid of the de-minimus threshold or even lowering it to point where its cost of collection = taxes revenue.

 

Basically the Canadian government has a policy of keeping frictions at the border on purpose in order to protect Canadian retailers. Its essentially government policy.

 

Do you think we'll ever see the de-minimus eliminated?  Or even a meaningful raise, perhaps with the Nafta renegotiation?

 

Seems sacrosanct so I'm not expecting much change.

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Whenever something doesn't make logical sense it is a good bet that government(s) are the cause.  My guess is that the imaginary line between the two gang territories (called a "border") is the reason for the inefficiencies in the market that you are noticing.

 

+1

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Canada is not a simple 75km northward extension of the US retail landscape, as quite a few very efficient US retailers have learnt the hard way (Target). To sell 'nation-wide' accross Canada is much more akin to trying to sell 'continent-wide' across Europe; every province is essentially its own little country, with its own rules, cultures, and even language. 

 

SD

 

Whenever something doesn't make logical sense it is a good bet that government(s) are the cause.  My guess is that the imaginary line between the two gang territories (called a "border") is the reason for the inefficiencies in the market that you are noticing.

 

+1

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Canada is not a simple 75km northward extension of the US retail landscape, as quite a few very efficient US retailers have learnt the hard way (Target). To sell 'nation-wide' accross Canada is much more akin to trying to sell 'continent-wide' across Europe; every province is essentially its own little country, with its own rules, cultures, and even language. 

 

SD

 

Whenever something doesn't make logical sense it is a good bet that government(s) are the cause.  My guess is that the imaginary line between the two gang territories (called a "border") is the reason for the inefficiencies in the market that you are noticing.

 

+1

 

Yes Europe also has the different gang territories that rkababang is talking about. Just cause everything is a little more developed, organized and stable than in Africa doesn't mean the original premise is any different: a bunch of chieftains battling for power and trying to consolidate what they have.

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The traditional explanation is that Canadian geography and logistics costs are the cause of pricing differences. But the more you think about it the less sense that should make. Sure, there are retailers and distributors with inefficient logistics who just mindlessly throw the difference into pricing. But I'm guessing as time goes on there will be less of those.

 

Another consideration in pricing is currency. CAD bounces around quite a bit. But producers want to have stable pricing for their product. So they have to be quite delicate with how they set prices for the Canadian market.

 

Furthermore, it's not so true that prices. To exemplify I've made a couple of quick checks. At this point a RAV4 in the US is starting at 24,660 USD. In Canada it starts at 27,750 CAD implying a CAD/USD rate of 0.8886. A Camry in the US starts at 23,645 USD. In Canada it starts at 26,590 CAD. CAD/USD implied is 0.8892. The RAV4 is made in Canada and the Camry is made in the US. The actual CAD/USD now is around 0.76. So at least Toyotas are sensibly cheaper in Canada at this point.

 

I've also went on Amazon to look at detergent. An 81 pack of Tide pods is 18.97 USD on Amazon.com. On Amazon.ca it costs 20.12 CAD. Implied CAD/USD is 0.9428. So it looks like detergent is quite a bit cheaper in Canada right now.

 

I don't really want to say that this is completely representative about what's going on right now. But cars and detergent are some common things people buy. I was really surprised at the Tide pricing by the way.

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Logistics are a factor, as supply chains are largely East-West for much of Canada.

If you're in Saskatchewan, or Manitoba it's a long way to the coast.

 

FX is typically NOT an issue.

It's very easy to offset CDN denominated assets against CDN denominated liabilities, and put on a P&L currency hedge - if you so choose. Most don't and simply accept the P&L volatiliy as a cost of doing business (chose to make it an issue) 

 

Province & sticker price matters.

A company (& thereby you) has incentive to buy a new car in Alberta (7% GST free) and have it shipped to them by rail - as soon as the 7% tax saving exceeds the rail cost (30K break-even).  Buy expensive cars in Ontario and the company has incentive to go European; the car is bought in Alberta, shipped in from a east coast port, and a company saves 2x the freight cost from Alberta to Ontario. Buy in BC and a company has incentive to go Asian. If the car costs <30K, it's not worth it (hence companies don't do this for their sales force cars).

 

Type of purchase also matters, as big ticket industrial goods will often qualify for provincial incentives as well. No different to Europe.

Whole different game in the frozen north!

 

SD

 

 

 

 

 

 

 

 

 

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I would guess you could eliminate almost the whole difference by just getting rid of the de-minimus threshold or even lowering it to point where its cost of collection = taxes revenue.

 

Basically the Canadian government has a policy of keeping frictions at the border on purpose in order to protect Canadian retailers. Its essentially government policy.

 

Do you think we'll ever see the de-minimus eliminated?  Or even a meaningful raise, perhaps with the Nafta renegotiation?

 

Seems sacrosanct so I'm not expecting much change.

 

Its pretty weird in a way. In Britain free trade policies during the 19th century were massively popular. I'm guessing it was because the working class knew they would benefit but also knew that it must be a good thing since the rich opposed it. Gladstone was an enormously popular prime minister. At tha

 

The Canadian government will probably never do this. Stephen Harper didn't touch it. The retail industry will claim correctly that it will result in massive job losses. Its possible though they get pressured by other countries. Europe managed some concessions.

 

Its a curious situation where we have to  hope that foreign governments pressure our government to do something to benefit us.

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You can look at the free market as a network.  Government, taxes, and regulations can be put in the same category as crime, sabotage, and natural disasters.  They are all damage to the network that needs to be routed around.  Products and services almost always get to where they are going anyway (look at even the extreme cases like illegal drugs or weapons) but it takes longer and costs more.

 

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You can look at the free market as a network.  Government, taxes, and regulations can be put in the same category as crime, sabotage, and natural disasters.  They are all damage to the network that needs to be routed around.  Products and services almost always get to where they are going anyway (look at even the extreme cases like illegal drugs or weapons) but it takes longer and costs more.

 

I assume I know your answer, but do you think that all environmental regulations are damaging? 

 

Take, for instance, regulations concerning leaded gasoline, or the dumping of hazardous waste. 

 

My instincts have always been that the free market can behave very badly for a prolonged period of time, so some regulations are essential to protect the public interest over the interest of the few (on the premise that a great deal of damage can be done before the network finds a new node on its own).  It seems there are countless examples of this type in the environmental sphere, in particular.... and I'm not talking about global warming here.

 

But I have never really engaged this topic beyond base instinct, so I'm wondering how a true free-marketer thinks about such issues.

 

 

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You can look at the free market as a network.  Government, taxes, and regulations can be put in the same category as crime, sabotage, and natural disasters.  They are all damage to the network that needs to be routed around.  Products and services almost always get to where they are going anyway (look at even the extreme cases like illegal drugs or weapons) but it takes longer and costs more.

 

I assume I know your answer, but do you think that all environmental regulations are damaging? 

 

Take, for instance, regulations concerning leaded gasoline, or the dumping of hazardous waste. 

 

My instincts have always been that the free market can behave very badly for a prolonged period of time, so some regulations are essential to protect the public interest over the interest of the few (on the premise that a great deal of damage can be done before the network finds a new node on its own).  It seems there are countless examples of this type in the environmental sphere, in particular.... and I'm not talking about global warming here.

 

But I have never really engaged this topic beyond base instinct, so I'm wondering how a true free-marketer thinks about such issues.

 

They are damaging to the network in the sense that they either increase time and/or costs.  They are only "necessary" because it is impossible under the current regulatory environment to properly sue the people causing this damage to the environment.    It is a case of the tragedy of the commons.  No one is allowed to own a river, so no one stops me from dumping hazardous wastes into it.  Government causes a problem, then swoops in to "fix" it.

 

Where I grew up there was the dirtiest coal power plant you can imagine, there were parts of town where their cars were covered in soot every morning.  The problem was that it was a municipally owned power plant and didn't have to follow the same regulations as privately owned plants, and of course, you couldn't sue them either.

 

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They are damaging to the network in the sense that they either increase time and/or costs.  They are only "necessary" because it is impossible under the current regulatory environment to properly sue the people causing this damage to the environment.    It is a case of the tragedy of the commons.  No one is allowed to own a river, so no one stops me from dumping hazardous wastes into it.  Government causes a problem, then swoops in to "fix" it.

 

Where I grew up there was the dirtiest coal power plant you can imagine, there were parts of town where their cars were covered in soot every morning.  The problem was that it was a municipally owned power plant and didn't have to follow the same regulations as privately owned plants, and of course, you couldn't sue them either.

 

Interesting.

 

So is private ownership of traditionally public resources a central tenet?  And does government still protect areas of environmental importance?  Or is something only protected if privately owned, and then only in the sense that they may have to pay damages?  Not trolling.  I probably should just go read something but am being lazy and asking.

 

Also, what does "properly sue" mean?  Ultimately it would seem the court(s) would then be deciding the true value of environmental protection, in terms of the level of damages they award.  So didn't the regulatory stick in essence just get passed to a judge?  (ie. Right now, breaking regulations results in penalties/fines. Under this scenario it results in damages, but now the richer party has the upper hand.) Or perhaps I'm misunderstanding.

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They are damaging to the network in the sense that they either increase time and/or costs.  They are only "necessary" because it is impossible under the current regulatory environment to properly sue the people causing this damage to the environment.    It is a case of the tragedy of the commons.  No one is allowed to own a river, so no one stops me from dumping hazardous wastes into it.  Government causes a problem, then swoops in to "fix" it.

 

Where I grew up there was the dirtiest coal power plant you can imagine, there were parts of town where their cars were covered in soot every morning.  The problem was that it was a municipally owned power plant and didn't have to follow the same regulations as privately owned plants, and of course, you couldn't sue them either.

 

Interesting.

 

So is private ownership of traditionally public resources a central tenet?  And does government still protect areas of environmental importance?  Or is something only protected if privately owned, and then only in the sense that they may have to pay damages?  Not trolling.  I probably should just go read something but am being lazy and asking.

 

Also, what does "properly sue" mean?  Ultimately it would seem the court(s) would then be deciding the true value of environmental protection, in terms of the level of damages they award.  So didn't the regulatory stick in essence just get passed to a judge?  (ie. Right now, breaking regulations results in penalties/fines. Under this scenario it results in damages, but now the richer party has the upper hand.) Or perhaps I'm misunderstanding.

 

Yes, I think everything should be privately owned.  In essence the regulatory stick would be passed to some type of justice system, but I am not convinced that government is the correct institution to be running a legal/tort system.  Even law should be privatized.  There is no way to snap your fingers and get from here to there easily, but there was no way to get from the god kings of ancient Egypt to a constitution-limited Republican government quickly and easily either.  Culture has been evolving for thousands of years and will continue to do so.  Government is downstream from culture.

 

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I fuly agree with rkababang

 

@doc75: sure the free market can take a while to reach an optimum (just as the price of a stock can take a long time to reach intrinsic value) but at least it does go there. Governmental interference just ends up creating larger bubbles and create whole industries that add little to society but deal with governmental regulation (PWC, Delloitte are huge companies).

 

In the end it comes down to motivation. People act in their own self interest. Because of this governments are inefficient and wasteful: they are being rewarded to be just that, so what else are we expecting really?

 

Thanks for engaging the discussion in a civil matter btw :)

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I fuly agree with rkababang

 

@doc75: sure the free market can take a while to reach an optimum (just as the price of a stock can take a long time to reach intrinsic value) but at least it does go there. Governmental interference just ends up creating larger bubbles and create whole industries that add little to society but deal with governmental regulation (PWC, Delloitte are huge companies).

 

In the end it comes down to motivation. People act in their own self interest. Because of this governments are inefficient and wasteful: they are being rewarded to be just that, so what else are we expecting really?

 

Thanks for engaging the discussion in a civil matter btw :)

 

Actually, most individuals are not logical and fairly wasteful too. Homo Economics is a very rare species.

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I fuly agree with rkababang

 

@doc75: sure the free market can take a while to reach an optimum (just as the price of a stock can take a long time to reach intrinsic value) but at least it does go there. Governmental interference just ends up creating larger bubbles and create whole industries that add little to society but deal with governmental regulation (PWC, Delloitte are huge companies).

 

In the end it comes down to motivation. People act in their own self interest. Because of this governments are inefficient and wasteful: they are being rewarded to be just that, so what else are we expecting really?

 

Thanks for engaging the discussion in a civil matter btw :)

 

Actually, most individuals are not logical and fairly wasteful too. Homo Economics is a very rare species.

 

Yes, that is why markets are not perfect.  Just look at the stock market as a microcosm of the market as a whole.  There are often miss-priced stocks, in both directions.  The market doesn't always do the most efficient thing in the short term, but it approaches it in the long term.  It does this by giving an incentive to those who recognize an inefficiency a chance to profit by helping to correct it.  It isn't perfect, it sometimes takes a while, but it works better than anything else possible.  I'm not a Utopian who thinks problems can be solved easily by simply giving a group of people the right to use force against others and having them use their infinite wisdom to make rules everyone else must follow.  Laws aren't magic, the people who make them are not anymore wise or altruistic than everyone else (in fact they are usually considerably less so).  Human societies can never be perfect, but free markets operating in a culture of respect for private property rights and a disgust for the initiation of force would be the closest we could ever hope to get.

 

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I fuly agree with rkababang

 

@doc75: sure the free market can take a while to reach an optimum (just as the price of a stock can take a long time to reach intrinsic value) but at least it does go there. Governmental interference just ends up creating larger bubbles and create whole industries that add little to society but deal with governmental regulation (PWC, Delloitte are huge companies).

 

In the end it comes down to motivation. People act in their own self interest. Because of this governments are inefficient and wasteful: they are being rewarded to be just that, so what else are we expecting really?

 

Thanks for engaging the discussion in a civil matter btw :)

 

Actually, most individuals are not logical and fairly wasteful too. Homo Economics is a very rare species.

 

Yes, that is why markets are not perfect.  Just look at the stock market as a microcosm of the market as a whole.  There are often miss-priced stocks, in both directions.  The market doesn't always do the most efficient thing in the short term, but it approaches it in the long term.  It does this by giving an incentive to those who recognize an inefficiency a chance to profit by helping to correct it.  It isn't perfect, it sometimes takes a while, but it works better than anything else possible.  I'm not a Utopian who thinks problems can be solved easily by simply giving a group of people the right to use force against others and having them use their infinite wisdom to make rules everyone else must follow.  Laws aren't magic, the people who make them are not anymore wise or altruistic than everyone else (in fact they are usually considerably less so).  Human societies can never be perfect, but free markets operating in a culture of respect for private property rights and a disgust for the initiation of force would be the closest we could ever hope to get.

 

The biggest innovation of the past 400 years is the limited liability joint stock corporation. Does it exist in your world?

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