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From: midkiff@sp66.csrd.uiuc.edu (Sam Midkiff)
Newsgroups: misc.consumers,alt.activism,talk.environment,comp.org.eff.talk
Subject: Re: Advertising is bad
Keywords: DMA Suppression junk-mail recycling activism
Message-ID: <1991Feb6.021812.14291@csrd.uiuc.edu>
Date: 6 Feb 91 02:18:12 GMT
References: <156215@felix.UUCP> <1991Feb1.054640.1441@cs.ucla.edu> <156606@felix.UUCP> <1991Feb5.192632.20536@murdoch.acc.Virginia.EDU>
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spm2d@newton.acc.Virginia.EDU (Steven P. Miale) writes:

>In article <156606@felix.UUCP> asylvain@felix.UUCP (Alvin "the Chipmunk" Sylvain) writes:
... lots of stuff deleted ...
>>
>>(I say "if it's a good idea", because people are often surprised to find
>>out that it's not always a good idea.  It frequently happens that reducing
>>the price of an item also reduces demand.)

>Reducing price reduces demand. Contrary to what EVERY SINGLE ECONOMICS
>TEXTBOOK IN THE HISTORY OF MANKIND HAS SAID, you have just really stuck
>your foot in your mouth. OK, if this is true, then raising prices increases
>demand, eh? DUMB, DUMB, DUMB.

Actually, for some "luxury" items, price decreases can lead to decreased
demand, since part of the reason of owning the item is to show that you
can afford such an expensive thing.   Also, some people with more money than
time will buy the most expensive item under the assumption that it is the
best, or at least good enough.  And finally, when the price of silver 
skyrocketed some years ago, demand for silver bullion increased as people
tried to get in on a "good thing."  When the price began to plummet, demand
dropped accordingly - so much so that silver now only sells for about 10% of 
its peak price.

Simple demand/price analysis assumes that people are rational,
that they are attempting to maximize their purchasing power, and that their
desires are infinite.  Although this is often true enough, especially for the
majority of products and the majority of consumers, anyone who attempts to
apply simple economic laws to *all* economic activity is being, shall I say it?,
DUMB, DUMB, DUMB.  

What this has to do with the morality of advertising, I cannot say.

Sam Midkiff
midkiff@csrd.uiuc.edu