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Comment by zh3 | Hacker News Reader

Company A treats its customers with respect, lets them maximise the return on their investment by giving them all the details and helping them keep the instrument going as long as possible.

Company B releases a product that works pretty much as well as Company A's but is cheaper (because it isn't investing in the aftersales support). Since support is an expensive business, by cutting it Company B makes more profit.

In the long run, Company B wins. Quite a few companies are smart enough to see how this works, and so morph from being an A type company to being a B. Evolution in action, the fitter (most profitable) company survives (shame about the prey..ah, "clients").

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Indeed. I think this is a textbook example of market failure: Something where the most profitable course of action very clearly does not align with the course of action overall best for society (which would be to maximize the lifetime of those devices if possible - but in any way not deliberately shorten it).

Hence this is a prime example where regulation would be needed.

> Indeed. I think this is a textbook example of market failure

No, it shows that markets work perfectly - they just optimize for what the customer wants to buy, not for some noble goal that you desire.

The customer wants that you deny them schematics?

The customer wants machines that are more difficult to maintain and repair?

Is the customer a masochist?

As the market data shows, most customers value a very low price over anything else. So the market delivers.

On the other hand, if the noble ethical goals that you list were more important for the customer, he would prefer devices that satisfy these goals (as much as possible) over low prices in his buying decision(s).

How does the market data show that? This is not an A/B test, there is usually not an equivalent alternative to compare against.

See e.g. the right-to-repair debate. The function is important enough for farmers to demand regulation and drive the prices of old, non-locked-down tractors through the roof. And yet, it's still more profitable for John Deere to lock down their tractors.

When deciding between the packages "modern, feature-rich tractors that are locked down" or "old, reparable but overpriced tractors", the former probably win. That still doesn't imply that farmers "want" locked down tractors or that reparability is of no importance to them.

Also yes, we do need ethics in business. Last thing I've read, even some MBAs have heard of that by now.

> See e.g. the right-to-repair debate. The function is important enough for farmers to demand regulation and drive the prices of old, non-locked-down tractors through the roof.

This is in fact a textbook example for how markets work. By the insane prize increase of old, non-locked-down tractors, every sane market participant can see how much more of a prize farmers are willing to pay for non-locked-down tractors.

I believe every manufacturer of tractors now does a careful market analysis and is probably (secretly) developing a more open, but expensively prized tractor.

My bet: In a few years there will be new tractors on the market that are better repairable, but higher prized - exactly what an economist would predict. It's just that we are currently in a transformation period.

Markets can be in pathological states, what people usually call market failures. Basically when the transition cost from one equilibrium to a "better" is too high (barriers to entry, eg due to regulatory capture, not enough capital available, cooperation problems for the many small agents - for example because the powerful agent can punish those who try to organize, what happens when some workers try to unionize), the market stays put. Waste and rents are generated. (The union organizers fired the cost of labor basically freezed.)

In case of tractors it's not at all obvious how fast the market will provide the tractors with lower TCO, that farmers wish for.

Have you considered for a moment that the customer knows very little about what she is buying, especially nothing at all about the long term value of the product? When the only thing you know about various alternatives is the price, how are you supposed to choose what's best for you?

Information scarcity is a defining feature of modern market, let's not forget that.

That's what makes this conversation interesting. People who are in the market for a $20K piece of test equipment are likely to be experts who are well equipped to evaluate the product's specifications.

Probably they are just as susceptible to hyperbolic discounting as others. So they undervalue the problem of maintenance in the future compared to saving some money now, even if they are thinking about it.

The notion that the market is always optimal is one of the central articles of faith in free-market fundamentalism. It's essentially tautological, a commerce-filtered spin on the just world fallacy.

What you ignore is that there are a bunch of information and experience asymmetries here, some of them intentionally created by vendors. There are also big problems with short-term biases and principal-agent problems. These lead to demonstrably sub-optimal global outcomes.

As an example, look at the recent wave of Softbank-funded idiocy. There's no way WeWork was an optimal deployment of capital. You could have lit $10 billion on fire and done better. But it worked out very well for Adam Neumann, who not only got lots of short-term adulation and wealth, but somehow ended up becoming a billionaire because they paid him to go away. And this is from the supposedly hyper-rational experts in the world of finance. If they can't get it right, there's little reason to think that random purchasers and Tektronic's middle managers will.

> As the market data shows, most customers value a very low price over anything else. So the market delivers.

Right, and it delivers that by pushing costs onto the greater proportion of people who are not involved. That is neither ethical nor sustainable -- it's more like a kind of theft.

What you are citing is a clear example of how the "free market" can fail to operate in the best interests of society.

No, most customers are simply incompetent - the vast majority of them will never attempt repairs regardless of the availability of schematics.

It could also be argued that there is an asymmetry of information. Consider trying to figure out how reliable a product is. By eliminating third-party servicing, it is very easy to conceal a product's failure rate. There is a strong conflict of interest in obtaining that information from vendors. Anecdotal information from consumers is going to be highly biased (one way or the other). While obtaining that information from people who repair equipment has its problems, they will have a better perspective.

"The market works perfectly" isn't something you can say without defining what the market is supposed to do. If you consider "the market" to only have to care about itself and not any external effects it causes then sure, but that's like saying car owners don't have to worry about air pollution because it's "outside the car".

The market is intrinsically linked to its effects on the environment it's in and I would certainly consider its failure to account for that a failure. To put it in CS terms, if build a "world peace" gAI with a reward function that doesn't include "not killing humans" and it starts killing humans, the argument of "it's working perfectly" isn't really a useful one if you want to stay alive. Adding a negative term to the reward function is equivalent to marker regulation, yet while we have entire fields of study dedicated to the first, the latter is frowned upon.

Regulation is just a furthering of the cultural decay that is the root cause of these issues in the first place. Be careful suggesting violence as an answer to society becoming crummy as it always leads to worse crumminess.

Why do you want to regulate against human nature? That always massively backfired.

In my view, it is successful more often than not. Laws against stealing, murder, etc., are a form of regulating against human nature, and they appear to be pretty successful.

Regulation is mandatory in order to have a society. The question isn't whether or not it should exist, but whether or not the particular regulation is good.

This isn't "evolution in action" in any inevitable sense. This only happens if the consumer values up-front price over TCO. Admittedly, with emphasis on quarterly earnings, this is the path many companies have chosen, but it's not universal.

But consumers value up-front price over TCO. Why else would most people finance their phones with their plans instead of buying them directly?

My guess is because that’s what they’re sold on and offered. Also perverse incentives come into play. With companies it’s quarterly results, with consumers it’s consumerism culture and the insane financing dependency people are hooked on.

Valuing up-front over TCO only makes sense for very large purchases and for business investments.

Time utility of money. A lot of those financing plans are interest-free and surprisingly straightforward, and add up to the actual retail value of the device over the time of the plan, not one penny more. These proliferated as years-long contracts became unpopular.

In the case of Verizon, signing up with such a plan also allows you to return and upgrade your phone after it's halfway paid off.

With phones getting more and more ridiculously expensive, there's little reason not to do this unless you'd rather be out $1000+ immediately when you have the option to be out $40/month for a couple years with no downsides instead.

"This only happens if the consumer values up-front price over TCO."

Which many, many, many... do.

The world's largest retailer is Wal-mart for a reason (which has nothing to do with TCO and everything to do with up-front price of goods).

Exactly, same happens in other markets like consumer electronics or cars, people complain all the time that “things aren’t built to last anymore” but when faced with the decision they will just buy the shiniest one for the price. So who are to be blamed? Us the consumers.

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