You're looking at Less Wrong's discussion board. This includes all posts, including those that haven't been promoted to the front page yet. For more information, see About Less Wrong.

PhilGoetz comments on Market Failure: Sugar-free Tums - Less Wrong Discussion

3 Post author: PhilGoetz 30 June 2016 12:12AM

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Article Navigation

Comments (30)
Tags: economics

Comments (30)

You are viewing a single comment's thread. Show more comments above.

Comment author: PhilGoetz 25 July 2016 12:54:08AM 0 points [-]

That doesn't look like a viable hypothesis because if it were true, such people would not be VCs at all.

That statement makes no sense and has no support. What, you're imagining that I said that VCs think all profitable things are already being done? That is not what I said. What I said, which is true, is that VCs don't jump into established markets that already have huge dominant players.

In real life the markets drive the price down to the cost of production only occasionally.

"Close to", not "to". The difference is enormous--it's the difference between free market theory and Marxism.

The theory of the free market is that markets do so; failure to do so is called a failure of the market. It is a theoretical term, so saying "theories are secondary" is nonsense.

Restated:

In real life the markets drive the price down close to the cost of production only occasionally.

Citation needed.

Comment author: Lumifer 25 July 2016 04:01:52PM 0 points [-]

What I said, which is true, is that VCs don't jump into established markets that already have huge dominant players.

Unfortunately for you, what you actually said is easily visible a bit upthread. Let me refresh your memory:

I'm theorizing that the VCs believed that the fact that the big companies did not make any such product proved there was no profitable demand for it, because the market worked.

The cost of production is basically an asymptotic limit in the long term. Whether it's "close to" or "to" is irrelevant, you are not going to get there anyway.

It is a theoretical term, so saying "theories are secondary" is nonsense.

Oh, dear. Let us consider phlogiston. It is a theoretical term, isn't it?

The problem is that theories are useful only insofar they reflect reality. You can make your theory contort in various ways, but unless these contortions match the reality, they shouldn't be entertained.

To repeat myself, if your theory predicts something that does not happen (regardless of whether it uses "theoretical terms" or not), you need a better theory.

Powered by Reddit Powered by Reddit