Isn't it the same in price negotiation? Only the producer knows the costs. Perhaps the difference is that money can be shifted around more flexibly. Even if I come out with a negative money balance from a negotiation (costs more than the buyer pays), it might be worth it for long term goals. But you cannot borrow time. You cannot do the 1 week project in -1 weeks and then compensate by doing the next 1 week project in 3 weeks and break even.
Price negotiation is not zero sum. Zero sum means one party’s gain is exactly equal to the other party’s loss. Most deals are positive sum - both parties get benefits. Price negotiation is about the seller getting some the upside of the buyer’s benefits but not so much that it sucks for the buyer and not so low a price that the seller will walk.
Some deals are inherently negative sum - if you bought a lemon.
There is such a thing as negotiating too hard on price. The deliverables have lower cost to benefit than if you paid more money. Or worse no deliverables. Worse than that fatal realized liabilities.
I worked with a group that designed telcom IC's. One of our customers developed a new product. Which then failed in the field. The parent company had to issue a recall. Destroyed all remaining inventory and canceled the product. All because someone jacked the microphone supplier down about 5 cents on a part.
If one thing if you are haggling over a used toaster at a yard sale. It's another when you are negotiating a business relationship where the success of both parties is important. A contract with a supplier doesn't do you any good if the terms are so bad it cripples their ability to execute.
That highlights a beef I have with economics. Failure to understand that business relationships are exactly that. You can't model them using the sorts of time invariant non-network models they use.
First, Not everything is a commodity with perfect substitutes, arguably most things aren’t. Substitutability goes beyond price.
Secondly, benefits are not necessarily equal or a linear function of cost.
Third, whether a game is zero, positive, or negative sum requires a look at the costs/benefits of the whole transaction. Saying that a buyer gains $1 more if the price goes up is obvious, it that doesn’t necessarily make it zero sum when you look at the overall transaction of a $1 price raise. .
Zero sum implies that price, costs and benefits are equal. I spend $20 on a product that cost you $20 to make, and I get $20 of benefits out of it.
Whereas I buy something for $20 , it cost you $5 to make, and I got benefits of $100 out of it, that’s positive sum, as both the buyer and seller got positive gain. If you raise the price, the deal isn’t as great, but it’s not zero sum.
