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> The market will avoid the proprietary solutions if that's really what the market feels I don't really buy into (no pun intended) any argument that relies on

> The market will avoid the proprietary solutions if that's really what the market feels I don't really buy into (no pun intended) any argument that relies on the efficient market hypothesis. As this article pointed out, there's a vast asymmetry of information, which prevents an efficient market, even in theory. > but I suspect these companies actually have a good idea about what their customers are looking for. I suspect these companies have a good idea about what will cause their customers to purchase more often, and which parts cannot be evaluated on a showroom. Replaceable batteries would add tremendous value for customers, and battery life is frequently the most desired feature in surveys.

eru 4y ago
> As this article pointed out, there's a vast asymmetry of information, which prevents an efficient market, even in theory. What kind of theory are you using here? There might be some theoretical reasons to expect that symmetric information (and a few other conditions) will lead to an efficient market. But that doesn't mean that a pre-existing information symmetry is necessary for an efficient market. The classic example is the 'market for lemons', a paper about the information asymmetry in the market for used cars: layman buyers typically can't judge a used car well via a short inspection. That was supposed to prevent an efficient market where you can buy quality goods. Of course, the business solution to this problem is fairly straightforward and profitable: reputation. You run your company with strict standards, so over time you build up a reputation and charge a premium for that. In addition you can sell warranties, too. A really simple example is white goods: it's really hard to judge a dishwasher when you just see them in the store. There's reviews I can look at, but I can also just go and buy a Miele dishwasher. They are pricey, but I also know that they are extremely high quality and will last. For a while, Miele could ride that reputation and sell shoddy products until the market catches up. But it's more profitable for them in the long run to defend their reputation. (Also employees would probably rebel against a change in policy. Many people like to take pride in their work.) This is all without regulation having a binding impact: shoddy dishwashers are just as legal as premium dishwashers.
- pessimizer 4y ago
  > the business solution to this problem is fairly straightforward and profitable: reputation. "Reputation" is yet more information that is both well known to and distorted by businesses. It's no kind of counterbalance to information asymmetry, it's just another example of it.
  - eru 4y ago
    You seem to assume that businesses are some kind of mythical, omnipotent entities? In contrast, for many of my needs, I find it relatively easy to buy high quality items even where there's a vast information asymmetry, as long as I am willing to shell out for products from companies with stellar reputations. Granted that's neither foolproof nor applicable for every product or service. It can also get really expensive really fast. But: given your comment, it sounds like that strategy shouldn't work at all, and even companies with ostensibly great reputations should sell me only trash?
    - benlivengood 4y ago
      > In contrast, for many of my needs, I find it relatively easy to buy high quality items even where there's a vast information asymmetry, as long as I am willing to shell out for products from companies with stellar reputations. So it's not an efficient market because of the premium you have to pay for reputation.
      - eru 4y ago
        Huh? What? What's the definition of 'efficient' you want to be using here?
        benlivengood 4y ago
        "The efficient-market hypothesis is a hypothesis in financial economics that states that asset prices reflect all available information." from Wikipedia. There is a huge price spread on nearly-identical products because people don't have enough information to determine which of the various supposedly equivalent products available are more reliable, efficient, safe, etc. and this is reflected in people spending more than necessary. If, in fact, a particular brand was consistently more reliable than others but priced at a premium then with perfect information everyone would know this and a new manufacturer could introduce a similarly-reliable product at a price point within the spread and everyone would buy that instead.

eru 4y ago

> As this article pointed out, there's a vast asymmetry of information, which prevents an efficient market, even in theory. What kind of theory are you using here? There might be some theoretical reasons to expect that symmetric information (and a few other conditions) will lead to an efficient market. But that doesn't mean that a pre-existing information symmetry is necessary for an efficient market. The classic example is the 'market for lemons', a paper about the information asymmetry in the market for used cars: layman buyers typically can't judge a used car well via a short inspection. That was supposed to prevent an efficient market where you can buy quality goods. Of course, the business solution to this problem is fairly straightforward and profitable: reputation. You run your company with strict standards, so over time you build up a reputation and charge a premium for that. In addition you can sell warranties, too. A really simple example is white goods: it's really hard to judge a dishwasher when you just see them in the store. There's reviews I can look at, but I can also just go and buy a Miele dishwasher. They are pricey, but I also know that they are extremely high quality and will last. For a while, Miele could ride that reputation and sell shoddy products until the market catches up. But it's more profitable for them in the long run to defend their reputation. (Also employees would probably rebel against a change in policy. Many people like to take pride in their work.) This is all without regulation having a binding impact: shoddy dishwashers are just as legal as premium dishwashers.

pessimizer 4y ago
> the business solution to this problem is fairly straightforward and profitable: reputation. "Reputation" is yet more information that is both well known to and distorted by businesses. It's no kind of counterbalance to information asymmetry, it's just another example of it.
- eru 4y ago
  You seem to assume that businesses are some kind of mythical, omnipotent entities? In contrast, for many of my needs, I find it relatively easy to buy high quality items even where there's a vast information asymmetry, as long as I am willing to shell out for products from companies with stellar reputations. Granted that's neither foolproof nor applicable for every product or service. It can also get really expensive really fast. But: given your comment, it sounds like that strategy shouldn't work at all, and even companies with ostensibly great reputations should sell me only trash?
  - benlivengood 4y ago
    > In contrast, for many of my needs, I find it relatively easy to buy high quality items even where there's a vast information asymmetry, as long as I am willing to shell out for products from companies with stellar reputations. So it's not an efficient market because of the premium you have to pay for reputation.
    - eru 4y ago
      Huh? What? What's the definition of 'efficient' you want to be using here?
      - benlivengood 4y ago
        "The efficient-market hypothesis is a hypothesis in financial economics that states that asset prices reflect all available information." from Wikipedia. There is a huge price spread on nearly-identical products because people don't have enough information to determine which of the various supposedly equivalent products available are more reliable, efficient, safe, etc. and this is reflected in people spending more than necessary. If, in fact, a particular brand was consistently more reliable than others but priced at a premium then with perfect information everyone would know this and a new manufacturer could introduce a similarly-reliable product at a price point within the spread and everyone would buy that instead.