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If that is the decision they face, that means customers did not want the thing that was sacrificed, and leaving it out is an improvement. The danger most peopl

If that is the decision they face, that means customers did not want the thing that was sacrificed, and leaving it out is an improvement. The danger most people worry about is when the customers are getting a better experience at the expense of individuals who don't have any choice in the matter, like in the prison scenario. But negative externalities are hardly specific to this situation.

TeMPOraL 11y ago
I think you may be underestimating just how much crap customers can deal with before they say "enough" (and just how hard is it to coordinate them to say it together). I don't think anyone is happy that they have to replace light bulbs and electric kettles every other year, but we have no choice - the durable options are not on the market. They have disappeared years ago. And in case of housing, I think the conditions could reach a pretty horrible level before people would be forced to seek something else. My point is that market is too good at making things efficient. Its goal is to make things profitable. Which is a decent proxy for the peoples' goal of making a product or service "good", but those two ideas start to diverge at some point.
- jazzyk 11y ago
  Well, the market responds to consumers, who say (much to my chagrin): price/quantity over quality. The fact that these consumers spoil things for people like me who would gladly pay more for quality is another topic. But the market works as expected.
- caskance 11y ago
  I know exactly how much "crap" customers are willing to deal with. The difference is that unlike you, I don't take it as a given that they are wrong to do so. Is your computer crap because it's not a blue gene? Are you dealing with crap by driving a Honda instead of a Bentley? If people willingly choose conditions you think to be horrible, try to at least consider the possibility that you might be the one misjudging things and not them.
shawn-furyan 11y ago
> If that is the decision they face, that means customers did not want the thing that was sacrificed, and leaving it out is an improvement. This is only true if you don't take sticky prices into account. It is quite well established that sticky prices screw with efficient market theory quite a bit, and the scenario provided by the gp sounds like a good candidate for a sticky price scenario. edit: After thinking about this a little bit, let me go further. The parent's statement is veering into efficient market theory dogma territory. Causality is much more difficult to determine in macroeconomics than in sciences that have the benefit of controlled experiments. There are significant competing theories to efficient market theory that have things to say about scenarios like this, so a straight declaration of cause without caveats is misleading, particularly since efficient market theory clearly does not hold in many observed scenarios. Above, I'm not saying that sticky prices necessarily are the cause of the results that the gp is describing (or even corroborating that the scenario is something that necessarily happens), I'm just showing that the problem probably isn't as clear cut as the parent suggests.

TeMPOraL 11y ago

I think you may be underestimating just how much crap customers can deal with before they say "enough" (and just how hard is it to coordinate them to say it together). I don't think anyone is happy that they have to replace light bulbs and electric kettles every other year, but we have no choice - the durable options are not on the market. They have disappeared years ago. And in case of housing, I think the conditions could reach a pretty horrible level before people would be forced to seek something else. My point is that market is too good at making things efficient. Its goal is to make things profitable. Which is a decent proxy for the peoples' goal of making a product or service "good", but those two ideas start to diverge at some point.

jazzyk 11y ago
Well, the market responds to consumers, who say (much to my chagrin): price/quantity over quality. The fact that these consumers spoil things for people like me who would gladly pay more for quality is another topic. But the market works as expected.
caskance 11y ago
I know exactly how much "crap" customers are willing to deal with. The difference is that unlike you, I don't take it as a given that they are wrong to do so. Is your computer crap because it's not a blue gene? Are you dealing with crap by driving a Honda instead of a Bentley? If people willingly choose conditions you think to be horrible, try to at least consider the possibility that you might be the one misjudging things and not them.

shawn-furyan 11y ago

> If that is the decision they face, that means customers did not want the thing that was sacrificed, and leaving it out is an improvement. This is only true if you don't take sticky prices into account. It is quite well established that sticky prices screw with efficient market theory quite a bit, and the scenario provided by the gp sounds like a good candidate for a sticky price scenario. edit: After thinking about this a little bit, let me go further. The parent's statement is veering into efficient market theory dogma territory. Causality is much more difficult to determine in macroeconomics than in sciences that have the benefit of controlled experiments. There are significant competing theories to efficient market theory that have things to say about scenarios like this, so a straight declaration of cause without caveats is misleading, particularly since efficient market theory clearly does not hold in many observed scenarios. Above, I'm not saying that sticky prices necessarily are the cause of the results that the gp is describing (or even corroborating that the scenario is something that necessarily happens), I'm just showing that the problem probably isn't as clear cut as the parent suggests.