Quote:
Originally Posted by Ken Maltby View Post
Where
is the evidence that the basic principles of economics that Leebase is
presenting are overcome by some other, more sophisticated factors?
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The economics that Leebase is citing is a model which discusses profit maximization for a product. It is the belief that there is a "sweet spot" of pricing where at a certain price, a certain number of people are willing to buy the product and Revenue - Fixed Cost - Marginal Costs equals the maximum profit the company can make from that product.
The model is dependent upon the idea where when a product is priced anywhere other than that "sweet spot" it will naturally fall back to that level as the producers attempt to obtain the goal of profit maximization.
Totally ignored in Leebase's analysis is that in order for this to happen, the producers of the product must RECOGNIZE the fact that their product is not priced at the optimum level and be WILLING to change their price.
Keep in mind that companies quite often do not achieve maximum profit. Very often they only hit acceptable profit and they chug happily along at their non-optimized levels for quite some time. Or even worse, they have poor or non-existent profit and they give a product up as non-profitable altogether.
Thus - that is why Leebase is wrong in his statement that it is "IMPOSSIBLE" for eBooks to be priced incorrectly. It not only is possible, it happens quite frequently.