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In an efficient market, in the long run, the price of a unit of software would approach the marginal cost of a unit of software. I wonder how long it will be u
by fennecfoxen 13y ago
In an efficient market, in the long run, the price of a unit of software would approach the marginal cost of a unit of software.
I wonder how long it will be until essentially all software is free, and all the services are run more or less at cost (as the economists would put it, they can earn profits, just not economic profits). But in the long run, as they say, we're all dead ;)
- anigbrowl 13y agoThat's only true in cases of perfect competition, which mainly obtains for commodities. Products with different features are examples of monopolistic competition, because different products are not automatic substitutes for each other.
- fennecfoxen 13y agoI think you misunderstand a little. That's not the consequence of an efficient market, that's the definition of an efficient market. ANY market where the price of an item is higher than its marginal cost is an inefficient one. (The cost includes opportunity cost, though, so it's not like the widget factory needs to make zero accounting profit on the operation). It's quite probable, of course, that software in the general case is prone to market inefficiencies, especially in the short run: there are high fixed costs associated with producing software. Yet extant software is so stupidly easy to copy that it's unthinkable that, thousands of years hence, things like WORD PROCESSORS will have a good reason for costing money. So how long will it take to get there?