Re: Cause and Effect Reversed?

["Leif Svalgaard" <leif@xxxxxxxx>]

From: Shaw, David <dshaw@spartan.com>
> Pete is clearly stating the classical price-setting algorithm that
marketing
> folks in any industry are taught to use>
>That doesn't invalidate the algorithm.  In
> fact, from an economic perspective a prediction of micro-economic theory is
> that even if this algorithm isn't used explicitly in a market, prices and
> unit quantities sold will still tend to approach the values suggested by
the
> algorithm - that's the effect of entities which seek to maximize their
> profits competing in a market.

I don't think the algorithm is invalid, just that it is not applicable.
The duplication cost for software is essentially zero ($0.25 per CD).
I don't think MicroSoft uses the algorithm in pricing MS-Word, or
Windows, or anything else. The Linux people certainly don't.
It is time to get back to the original problem: Can we by lowering
the unit price on software (OS/400) increase the sales of AS/400
hardware. I think so. I think that the AS/400 is overpriced (most
of that is software - at least compared to Linux or NT) and that
that partly (apart from lousy marketing) is the reason for the
slow sales. Do you have a problem with that?


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