In Reply to: RE: I think it's a good strategy. posted by Tadlo on June 5, 2012 at 13:01:04:
Prices rise due to demand increases. Then it's time to invest (or get out) to get back in equilibrium.
However, this market is hardly competitive and this is a pure pricing strategy on the part of an oligopolost.
On the other hand, as the OP correctly pointed out, while the cost of making and marketing information may be high, transmitting that information (per unit) costs almost nothing. Given this problem (pointed out by Arrow), there tends to be under-investment by producers in information, and it is optimal. Hence, copywrite laws.
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Follow Ups
- zero profit is a long-run equilibrium in a competitive market - Frihed89 22:00:05 06/05/12 (0)