Why release a phone with 5 new features when you can just R&D one and put it in a new case?
In the ideal case of a competitive market, you don’t release just one new feature, because any of your competitors could release a phone with two new features and eat your lunch. But the real-world smartphone market is surely much closer to oligopoly than perfect competition.
The costs of the competition of the market are almost invisible, but we have been seeing them over decades get more and more obvious.
How sure are you that this isn’t rather the costs of lack of competition?
the real-world smartphone market is surely much closer to oligopoly than perfect competition
This is essentially my point, the government actually have to take measures to break up oligopolies, because oligopolies they are beneficial to companies for maximising profits by charging as much as possible for the least improvement (cost).
How sure are you that this isn’t rather the costs of lack of competition?
The costs we’ve been discussing are externalities like environmental degradation and economic inequality. Competition has been shown to bring down prices—by making sales dependent on lower prices, so this is good for consumers but doesn’t take into account those externalities (hence why they’re called externalities).
A need for lower prices means companies necessarily have to look for ways to cut costs, which means prioritising lower cost materials over environmentally friendly materials and lower cost labour and automation over good pay for employees. So, as long as the externalities aren’t part of the profit equation, the wider system will bear the cost and the system won’t self-balance.
There are many ways that externalities can be made part of the profit equation; carbon credits or minimum wage requirements and regulations, but these necessarily have to be introduced from outside the market, they are not produced by the market.
In the ideal case of a competitive market, you don’t release just one new feature, because any of your competitors could release a phone with two new features and eat your lunch. But the real-world smartphone market is surely much closer to oligopoly than perfect competition.
How sure are you that this isn’t rather the costs of lack of competition?
Thanks for your points npostavs
This is essentially my point, the government actually have to take measures to break up oligopolies, because oligopolies they are beneficial to companies for maximising profits by charging as much as possible for the least improvement (cost).
The costs we’ve been discussing are externalities like environmental degradation and economic inequality. Competition has been shown to bring down prices—by making sales dependent on lower prices, so this is good for consumers but doesn’t take into account those externalities (hence why they’re called externalities).
A need for lower prices means companies necessarily have to look for ways to cut costs, which means prioritising lower cost materials over environmentally friendly materials and lower cost labour and automation over good pay for employees. So, as long as the externalities aren’t part of the profit equation, the wider system will bear the cost and the system won’t self-balance.
There are many ways that externalities can be made part of the profit equation; carbon credits or minimum wage requirements and regulations, but these necessarily have to be introduced from outside the market, they are not produced by the market.