Sunday, January 21, 2007

Watering down the product in order to profit

Those who don't understand how markets work often worry that firms routinely cheat their customers. Certainly there are cases where that can happen, but most often firms are disciplined by a simple mechanism: consumers quickly learn the quality of the product and adjust their demand accordingly.

Thus, you may be able to profit by increasing the quality of your product even if you are reluctant to report thay you have. Here's a great example.

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