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If it were possible, say, to create a light bulb that lasted 1,000 years for a dollar. Who could afford to make such a thing? I sense that you think manufactur

by grn 12y ago

If it were possible, say, to create a light bulb that lasted 1,000 years for a dollar. Who could afford to make such a thing? I sense that you think manufacturers don't have an incentive to produce quality products like bulbs that can be used for a long time. I think you're making a mistake which I'll try to illustrate with an example. Suppose light bulbs cost 1 USD each and last 1 year. I invent a new light bulb that is the same except it lasts 2 years. Would you say selling it would be a bad deal for me? Of course if I were to sell it for 1 USD then it certainly would be. But the value of my bulb to consumers is at least 2 USD, because it's equivalent to buying and using two competitors' bulbs! Manufacturing costs aren't relevant - if my bulb is cheaper to produce then it's even better for me. You shouldn't look at the cost of production because it isn't the only factor. Take a look at e-books, for example. Sometimes they're even more expensive than paperbacks!

vidarh 12y ago
> I sense that you think manufacturers don't have an incentive to produce quality products like bulbs that can be used for a long time. They do, to an extent, if they're not a dominant market player. But the article demonstrates quite clearly that once you reach a certain size, the effect on overall market demand starts to become a concern that relates directly to how much product you'll expect to be able to shift. > But the value of my bulb to consumers is at least 2 USD, because it's equivalent to buying and using two competitors' bulbs! It's not, because people (rationally) discount future events: We won't fully believe the claim; we'll assume other things may make it break in the meantime; we may have more immediate uses for the extra dollar. A dollar saved a year from now is not generally worth a dollar today. It will be worth more than the competing products (all else being equal), but it won't be worth twice just because it lasts twice as long.
- grn 12y ago
  It will be worth more than the competing products (all else being equal), but it won't be worth twice just because it lasts twice as long. Absolutely agree. You rightfully point out broad simplifications that I made, though I think we agree that there's still an incentive for companies to build better products. Even if the price of the new bulb lower than 2 USD, but above 1 USD, the produces has an incentive to sell it - lower sales costs (you need to do it once), lower warehousing costs, etc. On the other hand the new technology can be more expensive than the old and offset these benefits.

by grn 12y ago

vidarh 12y ago

> I sense that you think manufacturers don't have an incentive to produce quality products like bulbs that can be used for a long time. They do, to an extent, if they're not a dominant market player. But the article demonstrates quite clearly that once you reach a certain size, the effect on overall market demand starts to become a concern that relates directly to how much product you'll expect to be able to shift. > But the value of my bulb to consumers is at least 2 USD, because it's equivalent to buying and using two competitors' bulbs! It's not, because people (rationally) discount future events: We won't fully believe the claim; we'll assume other things may make it break in the meantime; we may have more immediate uses for the extra dollar. A dollar saved a year from now is not generally worth a dollar today. It will be worth more than the competing products (all else being equal), but it won't be worth twice just because it lasts twice as long.

grn 12y ago
It will be worth more than the competing products (all else being equal), but it won't be worth twice just because it lasts twice as long. Absolutely agree. You rightfully point out broad simplifications that I made, though I think we agree that there's still an incentive for companies to build better products. Even if the price of the new bulb lower than 2 USD, but above 1 USD, the produces has an incentive to sell it - lower sales costs (you need to do it once), lower warehousing costs, etc. On the other hand the new technology can be more expensive than the old and offset these benefits.