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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Moominoid who wrote (10974)11/4/2001 6:43:32 PM
From: Don Lloyd  Read Replies (1) of 74559
 
David -

But these pricing adjustments pull down the price even faster, which seems to be the opposite of what you are saying. It still is true that Price*Quantity = amount paid - the question is how much of that amount paid is a fall in price and how much an increase in quantity per unit sold.

For competitive products whose manufacturers are suffering from both high competition and high productivity growth, total prices paid are almost certain to fall after an initial period of early adoption. The problem of adjustment is that it over-weights the contribution of a given product even as it becomes increasingly economically insignificant both in terms of total revenues and profits, and in terms of employment.

Regards, Don
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