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I'm saying get rid of the 6 core product line when it's just as effective to artificially limit the better product just to have inventory. You know, like how w

• mlyle 4y ago
  > I'm saying get rid of the 6 core product line when it's just as effective to artificially limit the better product just to have inventory. Not everyone is willing to pay the same price. If there's a market for 100k processors at $200 each, there could easily be a market for 50k slower processors at $150 each and 80k processors at $250 each. If yields are 95% at 8 core and 100% at 6 core: * The firm gets to make $7.5M more revenue * The firm avoids waste of about 5000 processors in the single-price, 8-core-only scenario. * The world gets 30,000 more processors vs. what the firm would make if they only could choose one price to optimize income * The firm has flexibility on meeting demand: they can alter the mix of 8 and 6 core processors they sell instead of frequently modifying price. This is a simple scenario, but it shows the reason for price discrimination: it generates more revenue and it also encourages a monopoly or a participant in monopolistic competition to make more product. 30,000 people who wouldn't have gotten a processor in the prior case now get one, and 20,000 people who would have otherwise gotten a high cost processor now spend less money.