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You also want price discrimination to let poor people use your product. Some people care about that sort of thing even if it costs them money. For example a ba

You also want price discrimination to let poor people use your product. Some people care about that sort of thing even if it costs them money. For example a bakery might choose to give away their leftover bread at the end of each day, so poor people can eat. This costs them money because some people might choose to get bread for free when they could have bought it at full price.

mikeash 7y ago
Nothing says you can't charge the poor people price for everyone. You want price discrimination to get wealthier people to pay more. To take your bakery example, they'd ideally like to charge more for their bread when the customer is rich, but that's not practical, so they're stuck charging the same price regardless. Many businesses work around this, imperfectly, by using coupons or sales.
- saint_fiasco 7y ago
  But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. I think many indy artists are like that, that's why they say they'd rather you pirate their games. They could have used more strict DRM instead, if they only cared about money.
  - cgriswald 7y ago
    > They could have used more strict DRM instead, if they only cared about money. Maybe, maybe not. DRM costs money and imperfect DRM can cost future customers, so in the case of an indy developer, it might be a net loss.
  - nybble41 7y ago
    > But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. In this situation the bakery is basically running a charity funded by the extra money they're getting through price discrimination. That's separate from their role as a business. The minimum sustainable price in the absence of price discrimination would not be the "poor people price" or the price paid by the rich, but rather the cost of material, labor, and capital which lies somewhere in between. Price discrimination and the absence of arbitrage allow the bakery to charge rich customers more, but it's entirely their choice to use that extra income to provide goods at a loss to those of lesser means. They could instead just keep the extra revenue for themselves.
yxhuvud 7y ago
Yes, and old games sell for less than new games, allowing poor to afford more. What is your point?

mikeash 7y ago

Nothing says you can't charge the poor people price for everyone. You want price discrimination to get wealthier people to pay more. To take your bakery example, they'd ideally like to charge more for their bread when the customer is rich, but that's not practical, so they're stuck charging the same price regardless. Many businesses work around this, imperfectly, by using coupons or sales.

saint_fiasco 7y ago
But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. I think many indy artists are like that, that's why they say they'd rather you pirate their games. They could have used more strict DRM instead, if they only cared about money.
- cgriswald 7y ago
  > They could have used more strict DRM instead, if they only cared about money. Maybe, maybe not. DRM costs money and imperfect DRM can cost future customers, so in the case of an indy developer, it might be a net loss.
- nybble41 7y ago
  > But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. In this situation the bakery is basically running a charity funded by the extra money they're getting through price discrimination. That's separate from their role as a business. The minimum sustainable price in the absence of price discrimination would not be the "poor people price" or the price paid by the rich, but rather the cost of material, labor, and capital which lies somewhere in between. Price discrimination and the absence of arbitrage allow the bakery to charge rich customers more, but it's entirely their choice to use that extra income to provide goods at a loss to those of lesser means. They could instead just keep the extra revenue for themselves.

yxhuvud 7y ago

Yes, and old games sell for less than new games, allowing poor to afford more. What is your point?