The Zero Profit World

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Matt Yglesias:

In a fully competitive market, products should be sold for the marginal cost of producing a unit. And in the software world, the marginal cost of producing a unit is zero. Therefore, in the long run software should be free and nobody should make a profit.

This is an odd use of the word “should,” I think. And rather than being an argument for free software1, it’s really more of an argument that either (a) economic “efficiency” is overrated or (b) fully competitive markets are overrated. If nobody ever got to make a profit, after all, the world would be a pretty dreary and backward place.

But then, I suppose I’m biased. The marginal cost of producing blog posts is indistinguishable from zero, and I’d just as soon make more than zero dollars producing them. So I’m not really a fan of long run profits trending to zero, even in the nonprofit world.

1For reasons that escape me, this argument is almost always employed as a criticism of industries like software and music that have very low marginal costs. I suspect ulterior motives.

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And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

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