Steve Wood <[email protected]> wrote: >Adrian Stott wrote: >> In a market, competition eventually results in the price for anything >> being just slightly above the cost of provision. >What?! Provision cost has NOTHING to do with it. Telecoms companies are >among the worst offenders in this respect. Text messaging costs >literally nothing to provide for example but it's only ever given away >"free" as a loss leader on expensive voice contracts. > >> Since the cost of provision of a wifi hotspot at Limehouse is almost >> nil, once you've added the cost of collecting any payments it might as >> well be free. > >Incidentally, presumably you would apply the same logic to on line >moorings then...?
Exactly. Assuming, of course, that it is possible to expand the supply. And what is the cost of provision of a new mooring (be sure to include the cost of the land, excavation, water, etc.)? No-one will create a new mooring unless he can cover the interest on those costs, and make a turn on top. If supply exceeds demand, then providers will drop their prices to attract custom until the price is below their marginal cost of provision. Then they will withdraw from the market. Unless these low prices attract more demand, that is. But note that I said "competition" above. If there are no competitors, the price won't drop below the one that maximises the return for the provider. Which I guess it what is happening with the Limehouse WiFi. And the text messages you mentioned. Adrian . Adrian Stott 07956-299966
