Re:Alchian–Allen effect
by amelius on Tuesday November 13, 2018 @11:19AM
(#18442105)
It doesn't sound obvious or universally true to me. For example: what if the expensive product is of only 1% better quality than the cheap product? Will people who use the expensive product not think that they are paying too much for too little gain, and switch to the cheaper product?
[ Parent
| on HN ]
The point is that even when there is a fixed price gap between higher quality and lower quality goods, the rationale to buy the higher quality gets stronger as that gap becomes smaller proportional to the price of the products.
It's not that people always buy the more expensive product.
Re:Alchian–Allen effect
by silvester23 on Tuesday November 13, 2018 @11:49AM
(#18442419)
That's completely independent from an increase in price though, isn't it?
I wasn't clear. I suspect that under certain conditions (price, relative quality etc), and at a certain increase of price, people will switch to the cheaper product because the quality difference isn't that much.