Re: Some interesting economic facts

[Matt Deatrick <mattd@shocking.com>]

	Have you ever heard of the term "increasing returns?" It means that
as you sell more items your profits go up rather than down, as is usually
the case(called diminishing returns). Software development adn production
follows these criteria: high initial cost(R&D), near zero marginal
costs(the cost of producing one more unit). The pricing laws of economics
state that price should equal marginal cost. This is due to the fact that
if you sold more you would lose money(your revenue from one more unit would
not exceed your production costs of one more unit- negative profit) and if
you sold less you would not be maximizing profit(you could produce one more
unit and make a profit because your marginal cost for that unit would be
less than your revenue). Ok, that was long. The point is that marginal
costs for software are almost zero! And given the nature of increasing
returns, M$, theoretically and economically speaking, could sell software
at marginal cost, or just above it, and still make a healthy profit!
	Expensive, in this case, is simple greed.
	Matt


On Wed, 22 Apr 1998, Brett Glass wrote:

> At 01:17 AM 4/22/98 -0400, Kendall Clark wrote:
>  
> >All I have to say in response to these insightful comments is:
> >
> >	"Join us now and share the software,
> >	you'll be free, hackers, you'll be free."
> >		--Richard Stallman, Free Software Foundation
> 
> Sorry, but I'd rather be expensive. ;-)
> 
> --Brett
>