A Beautiful Theory Falls to Ugly Data • Hacker News Board

Re: A Beautiful Theory Falls to Ugly Data

#71

Post by skrebbel » Fri, Jul 17, 2026, 7:04 AM UTC

zwaps wrote: post #23

skrebbel wrote: post #2

I had to look up “MC” to be able to understand this. It means Marginal Cost. EDIT I still don’t understand it, I think. My read is: someone named Coase theorized that monopolists of durable goods will actually sell their products at marginal cost because of some weird mind game with their customers (the obvious unwritten corollary being that monopolies are fine ). This is obviously untrue and we all know plenty of ex…

Somewhat that is it. The issue if, of course, that marginal revolution overstates the contribution of a single empirical study here. Of course everyone is aware that the original model doesn't hold in reality. The contribution of showing this in the ebook market is... not zero, but certainly not the implied "We killed the theory!!!!" Instead, there are decades of papers poking holes in the Coase model and producing i…

This is exactly the explanation I was looking for. Thanks!

Re: A Beautiful Theory Falls to Ugly Data

#72

Post by danaris » Sat, Jul 18, 2026, 8:09 AM UTC

eru wrote: post #14

grumbelbart2 wrote: post #4

Earlier quoted context omitted.

It's one of those "imagine a frictionless, perfectly spherical pig in a vacuum" theories that don't survive contact with reality. Buyers don't just pop up on timestamp zero and remain unchanged. They anticipate price changes, potential new buyers come in, the market is dynamic. I also don't understand why this only affects monopolies. The same logic should dictate that all products and services fall towards MC?

> The theorists, most notably Gul, Sonnenschein and Wilson and Fudenberg, Levine and Tirole, formalized Coase’s insight and showed that under quite general conditions the logic goes through. Which is rather surprising, since, as Tim and I point out, Coase’s conjecture implies that many patents and copyrights are essentially worthless — a prediction wildly at variance with the facts. The authors themselves had the sam…

The problem is, the entire right-wing/neoliberal subfields of economics have been utterly refusing to actually compare to reality and make adjustments since Reagan. They just repeat their dogma (like trickle-down economics), and when you point out that it's not working, they claim you're just not doing it hard enough.

Re: A Beautiful Theory Falls to Ugly Data

#73

Post by akk0 » Sat, Jul 18, 2026, 4:27 PM UTC

PunchyHamster wrote: post #25

myrmidon wrote: post #5

Earlier quoted context omitted.

Some aspects of the conjecture make sense and are observable: Consider e.g. Steam (digital video games): Prices are discounted over time because of "greed" (=> desire to sell the same product to customers that value it less than the first wave). Customers do adapt to this, and expect future discounts (sales) at release date already, and defer their purchase accordingly (despite valueing it higher!). But in reality, c…

> Consider e.g. Steam (digital video games): Prices are discounted over time because of "greed" (=> desire to sell the same product to customers that value it less than the first wave). Steam doesn't have actual monopoly. Their position is caused wholly by competition consistently shooting themselves in the foot by either offering inferior product or just annoy the customers For example let's take EGS: "We will take…

Confused readers may note that EGS refers, I think, to the Epic Games Store, and not to EroGameScape (which does not run a marketplace)