Yes that's a problem, but it's a different problem. The thrust of the DeLong/Summers quote is that of abuses from monopoly, which to me means price above marginal cost and lack of choice for the buyer. There is no survival issue. If the firm can't survive, there is no monopoly because there is no firm.
On Thu, Sep 3, 2009 at 4:37 PM, Jim Devine<[email protected]> wrote: > Miracle Max Sawicky wrote: >> RE: The ubiquity of flat marginal costs and the implications neo-classical >> micro are well-taken, but Eugene's cite of Delong/Summers I think does not >> follow. > >> Marginal costs for any particular bit of intellectual property are low and >> diminishing, but there is competition in the form of substitutes. If I am >> priced out of the market for the works of M. Perelman, I can turn to those >> of J. Devine. < > > The problem here is that due to low and diminishing MC, the AC above > MC, so that MC = P pricing means negative economic profits (AC > P). > Therefore, P > MC (or government subsidies) is necessary for the > firm's survival. Thus, monopoly (or government patronage) is > encouraged -- or the firm goes away. Of course, a firm may not have a > monopoly in all of its products, so that an unprofitable book by one > of the worthies mentioned above can be sustained via > cross-subsidization. > > In actual for-profit publishing, there seems to be a "winner-take-all" > market, as discussed in Frank & Cook's THE WINNER-TAKE-ALL SOCIETY. > Thus, if you go to the mystery section of smaller bookstores, you're > likely to see the same 10 authors again and again. James Patterson and > Janet Evanovich reap megamillions, but pulp writers who are marginally > less talented (as defined by that market) or slightly less lucky are > lucky to earn what they could be making as middle management in some > corporation. > > -- > Jim Devine / "laugh if you want to / really is kinda funny / cause the > world is a car / and you're the crash test dummy" -- Devil Makes > Three. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
