In a perfectly competitive market, competition, in the long run, drives the market price down to the marginal cost of production and the traded quantity to the level at which that price is also the maximum price the market will bear.

Yes when all the assumptions that hold in theory are in place, in reality I wonder.

"Markets are never in equilibrium, thus don’t be fooled by prices, but consider quantities: The short side exerts power."

http://www.globalresearch.ca/shifting-from-central-planning-...

In this situation none of the tenants hold. Information is not perfect, it's not a free market as only certain channels can provide the IP, prices are fluid.

For the balancing of supply and demand supply would have to be finite. In a digital world it is in practice infinite.

None of this guff works in the real world. Time to put all our econ 101 books onto a big boat, push it out to sea with a burning torch.

I'm not disagreeing with that; I was pointing to what basic economic principle was at issue in the upthread claim.

Clearly, the reality of digital goods markets underlines how distant reality is from ideal markets.

That's true, but only for fungible goods.

If you don't want to pay $5 to rent a digital copy of Frozen for your kids, then you can go to archive.org and pick a movie to watch for free. Your kids might be disappointed though.

> That's true, but only for fungible goods.

That's essential to the definition of competition, yes.

Not always.

I can watch baseball for free on television or I can go to the ballpark and pay to see it in person.

You pay in the first instance by way of constant commercial interruptions. (And if you wait and DVR it to remove the commercials, it's not really comparable to a live game you can visit in person anymore)

Have you been to a baseball game lately? Ads are everywhere.

Anyway, when I can, I watch baseball on the MLB streaming service where there are very few ads. Usually, they just blank out the screen during the commercial time which is almost as annoying.

> Nope that's just a misconception on how prices are set.

Your "misconception argument" doesn't seem to contradict what I'm saying. The seller sets the price, sure, but part of that price goes back to cover the cost of manufacturing, otherwise it will stop getting manufactured.