Earlier quoted context omitted.
No, a "supplier" has to pay for all of his raw materials costs. That includes inventory costs as well as distribution. Of course you can always restrict your timeframe and assume away this cost (inventory as already incurred), but this is not true in the general sense. In particular, if this is true, by assumption, the there is a limited supply by deduction. If you increased your supply [of information bits, not dupl…
I don't think you are understanding. Of course there are big costs in acquiring more product to sell. The question is: Do you have to pay those costs for each customer, or can you pay them once and amortize the cost over many sales? For example, Adobe Photoshop probably costs a lot to design. It has really high fixed costs, because you need to hire good developers and implement a bunch of advanced operations. However…
example: reseller> pays adobe every month/quarter example: adobe> pays versioning costs every 24 months
Provided you shrink the window of analysis, you can say "already paid for inventory, just amortizing it". But in that case, you don't have unlimited supply, you just have whatever you paid for.
In the case of adobe, despite having "unlimited copies" of CS5, they would (eventually) run out of supply of salable product if they did not version into CS6. So while its trivially true they could make unlimited copies of CS5, its not a great idea to perceive this as unlimited supply. The supply that matters is the part people are willing to pay for--this is the marginal information content-- not the marginal bit content of what is delivered.
In some ways I don't think we're disagreeing, just focusing on different elements of the analysis. My larger point was exactly that -- keep in mind the broader elements that are considered as relevant by CxO.
THe CEO of adobe makes decisions, for examople, about how often to incur the marginal cost of versioning the next Creative Suite, how rapidly and how much to budget, etc. COO of facebook looks at the marginal cost of data centers for the next 200 million users, etc, in part because s/he is looking at timeframes and scales which are not the same at the level of a project team, etc.