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Not bricking stolen toys is a form of price discrimination. The fact that stolen toys are not bricked and therefore have a resale value creates an incentive to
by gk 17y ago
Not bricking stolen toys is a form of price discrimination.
The fact that stolen toys are not bricked and therefore have a resale value creates an incentive to, well, steal toys. Manufacturers profit because people whose toys are stolen almost always replace them, so lots of theft means lots of additional sales. Service providers profit because cheap used devices mean more people can afford ownership, so lots of theft means lots of demand for connectivity, or electronic books, or whatever.
- gjm11 17y agoVery clever. But I'm not convinced: anything that increases the theft rate and thereby requires people to buy more also increases the effective cost of the product. I don't have any numbers on this, so you should be skeptical about what follows, but: introspection strongly suggests to me that when the price of a thing increases by a given factor, my probability of buying it goes down by a larger factor. (At least when we're talking phones, toys, music players, cameras, computers, etc.) Now, suppose you try to increase sales by encouraging theft: if a fraction f of devices are stolen and their owners buy replacements, then (1) the effective cost goes up by a factor of about 1+f and (2) the number of sales per "original" sale is about 1+f. If my introspection happens to describe how typical people behave, then the net result is that the vendor sells fewer devices. (And has less happy customers.) (Actually it's 1/(1-f), not 1+f, if your second iWidget is just as likely to be stolen as your first. Something in between if you are more careful to avoid theft once you've been bitten once.)
- rsheridan6 17y agoMost people think it won't happen to them, so they're not going to accurately price their gadgets.