Subject: Re: Non-proprietary software?
From: Russell Nelson <>
Date: 28 Sep 1998 04:17:20 -0000 writes:
 > Why do people pay more for the same product when it's in a name brand
 > box in the supermarket than they do when it's in a generic no-name
 > box?  The answer to this is probably approximately the answer to your
 > question.
 > Despite what some old-fashioned microeconomics courses teach, it is
 > folly to expect purely rational behaviour from consumers.  I
 > personally fully support any FSB which can get a bit more money by
 > exploiting irrational behaviour.

Brand loyalty is not irrational.  Branding can provide quite a bit of
value, by reducing transaction costs.  Whenever you see apparently
irrational behavior, look for transaction costs.

 >    Much of what the software industry does to justify higher prices
 >    actually leads to worse value for me, the consumer.
 > This characteristic is hardly unique to the software industry.
 > Capitalism implies tension between producers and consumers.  While
 > there certainly are publically spirited producers, many producers who
 > offer a better deal for the consumer are primarily motivated by the
 > possibility of increasing their market share.  When capitalism works
 > well, those producers who offer a better deal actually deliver it.
 > Alas, it doesn't always work well.

Right.  Transaction costs.  We haven't yet invented a good lubricant
for economic transactions (we take grease and oil for granted).
That's not surprising, because the fellow who named transaction costs
(Ronald Coase) is still alive.  Economics is a field with LOTS of new
discoveries being made, and to be made.

-russ nelson <>
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