[lbo-talk] the gains from variety

Wojtek Sokolowski sokol at jhu.edu
Thu Mar 11 13:13:28 PST 2004


Michael:
>
> Several points are intertwined here.
>
> 1. Some of what appears to be a question of choice is really a form of
> product obsolescence.
>
> 2. Some of what appears to be a question of choice is merely a way of
> corporations gaining shelf space, which reduces potential entrants.
In
> this sense, what appears to be choice is a form of restricting other
> potential choices. You got that one.

On the pain of hairsplitting - would not planned obsolescence be in the same category as crowding out competitors? The latter deprives customers of useful alternatives provided by other producers, the former deprives them of useful alternatives produced by the same producer. But in both cases the mechanism seems to be the same - eliminating alternative products by placing artificial restrictions on their use. The artifice used to that end is of secondary importance - whether it is fashion, changes in the software, or artificially high maintenance costs - the end result is the same.

However, the concept of choice in such situations is rather perfunctory. If it enters the equation, it does so usually as a semantic marketing gimmick to make the system look good in the public eye. However, the marketers can "crowd out" competing/alternative products without recourse to the illusion of choice - as they do in the computer or auto industries, where the "magic word" is "progress" rather than "choice."


>
> 3. Some choices overwhelm people making it more difficult to evaluate
> what is in their best interest. Not quite transaction costs.

Bounded rationality, to be precise. But it takes transaction costs to overcome it. Of course, there are many social mechanisms to reduce such transactions cost associated with bounded rationality, such as reputation, word of mouth, consumer organizations, information technology, government regulation and testing etc. The problem is that marketers know how and are given a free reign to obfuscate these mechanisms to their own advantage.

To reiterate, the problem is not with the choice per se, but with the institutional ramifications of production and distributions of commodity. The problems that you mention are products of these ramifications, not choice per se. The concept of choice is merely a myth propagated by marketers to legitimate the institutional ramifications that they created. But variety and choice can be a good thing - if used in a different institutional settings that is more conducive to unbiased assessment of product value and usefulness.

Wojtek



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