Quote:
Originally Posted by gideongallery
Actually he right your ignoring the supply side shift, people getting into the market because the profit margins are so good.
That what drives the profits to zero.
The economic slide to zero is halted by differentiation, it true for any good including commodities ( ie premium gasoline)
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Sure in a competitive market that is the case, but every example he used is not a competitive market product. If you have differentiation between the products it is not a competitive market. If I make a movie I control the shift of the supply of that movie, no one else. Actually I think there is room for argument for your example of premium gasoline. In the eyes of most consumers gasoline is gasoline regardless of brand. Where and who they buy from is a matter of convenience in most cases. Gasoline is a bad example anyway, it is an oligopolic good-companies can't just jump into the gasoline refining business and shift supply.