Re: is free, open source software ethical?


Am Dienstag, den 04.03.2008, 14:12 -0800 schrieb William Ahern:
Many economists will tell you that there's no such thing as dumping. It's a
myth--or more generously, a misunderstanding--about how free markets work.

Many other economists will tell you that's ideological drivel.

Ideally, in a free market, everybody charges the minimum price needed to
provide some goods or services, optimally allocating resources in the
process.

When dumping, a vendor sells for less than that price.
Even in an ideal market, this would lead to nonoptimal resource
allocation. Other than that, the vendor would soon go out of business,
leaving the market to competitors, so there would be no long-term
problems (though that may be ignoring relevant short-term effect - but
that's yet another can of worms).
In a real market, it's a ploy on market entry barriers. By undercutting
all reasonable prices, competitors give up on that market, so the
dumping vendor remains the last on his market. After that, he can raise
the prices above the true market price, as long as he keeps it low
enough that the usual market entry barriers keep new competition from
arriving.

So the practice of dumping is an exploitation of one situation where
real markets diverge from the theoretic ideals. At the end of such a
dumping maneuver, the market is even father from the ideal.
(That's the reason why dumping is considered illegal. Not because giving
gifts is unethical or something, but because it makes markets work less
well. It's the same kind of rationale that makes fraud illegal in most
countries.)

Since I'm an
optimist, and have this crazy idea that civilization in 2008 is vastly more
evolved than civiliation circa 1008,

In fact, "fair" pricing for various goods was subject to intense debate
in medieval times. So the issue isn't particularly new, it's just the
economic price relationships that have changed: food, lodging and
transportation have become vastly cheaper, so today, finding a fair
price for food isn't the matter of life and death that it could be in
1008. (And, of course, medieval people didn't have the theory for the
free market. It didn't matter much though, transportation was so
expensive that no real free market existed anyway.)

Regards,
Jo

.

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