>There is an issue with Bertrand Competition: it excludes the impact of marketing; it assumes that one pair of shoes is as good as another pair of shoes; it doesn’t factor in the cost of comparison, or the cost of switching, all of which are real.
Well that's an understatement. There's definitely a race to the bottom and it saddens me. At the same time, games aren't commodities. Shoes is a pretty laughable analogy.
I've been excited about some devs recently fighting against the race to the bottom:
868-HACK - $6 on the App Store. http://indiestatik.com/2013/09/11/868-hack-sales/
The Castle Doctrine - $16. No sales ever. http://thecastledoctrine.net/seedBlogs.php?action=display_po...
Democracy 3 - $25 for an indie game and I think has only had one 50% sale. http://positech.co.uk/cliffsblog/2013/11/19/lessons-from-lau...
Minecraft is a similar example (~$27) but people tend to blow that off as not relevant to the conversation because any other game isn't Minecraft.