Comment by tptacek | Hacker News Reader

Comment by tptacek | Hacker News Reader

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There is no natural law of scarcity which suppliers are required to honor. They can produce as much or as little of a good as they want. The producer controls scarcity of their offering. The market responds by identifying substitutes, not by coercing the producer into relaxing scarcity.

If your logic held, every paper book would cost the same amount; _The Very Hungry Caterpiller_ would cost within pennies of the same amount as Volume 1 of _The Art Of Computer Programming_. After all, you're not paying for the paper. Judging from the amount of junk mail in my mailbox every morning, paper is pretty cheap.

Clearly it is also the case that _The Art Of Computer Programming_ as an ebook has exactly the same scarcity as _Twilight: New Moon_'s ebook; according to your logic, they must also cost the same.

Scarcity is a key component of prices in that it affects the supply of a given good at a given price. Paper, ink, production time, human labor, etc. are all goods that have limited supply so they must be allocated accordingly.

If you're a parent you know that the Very Hungry Caterpiller uses different paper and different production techniques (holes in the pages, thicker paper) which while raising the cost is offset by the demand for it being much greater than TAOCP. TAOCP costs more due to a smaller demand and the fact that substitutes don't really exist. VHC has tons of substitutes.

I mean to say that ebooks' lack of scarcity seems to trigger consumer expectations about pricing and what they are willing to pay. This has implications for the demand curve. I wouldn't suggest that the ebooks should all cost the same but that their cost to produce additional units is zero. If a paperback book experiences a massive spike in demand that's protracted and extreme the costs of books to consumers would rise or a shortage would develop. There is no chance of an ebook shortage apart from amazon.com going down.

I don't know what this means. I see terms like "demand curve" and "key component of prices". But by your definition, the scarcity of any ebook is epsilon. Therefore, TAOCP must cost the same as Twilight.

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