12-29-2008, 03:48 PM
Seacrest wrote:
You guys must have read different Econ 101 textbooks than I did.
The price of a good or service has very little to do with the cost of production, but rather what the market will bear.
In this case, the market for "txting" has -- at this point in time -- decided it is willing to pay "x" per txt or "xx" for a specified level of nn to infinity txts.
That doesn't mean, of course that the market will always bear that price.
Disruptive technologies will undoubtedly soon appear that circumvent the producers' physical stranglehold on txt distribution, and they will then be forced to lower their prices, and of course this being the new era of "free market orthodoxy," reluctantly ask the government for a bailout.
I think this is largely correct (even though intended apparently as tounge-in-cheek) for a competitive, frictionless marketplace. The rub, however, comes because the cell companies throw up all sorts of barriers. You can't simply switch carriers of one drops their txt rates, and you certainly can't pay for voice from one carrier and txt from another. If those options were available, then this demand-side argument would hold up pretty well.
I'm kind of glad nobody ever texts me because at $.20 a pop my bill could easily double.