I haven’t read that much in the field of marketing, but what I have read so far has tended to confirm what I’ve read and taught in economics industrial organization: firms try hard to make products have distinctive feature packages in order to gain market power over customers whose ideal product is closer to that package. Even if some of those features are symbolic and created via how ads make people see products.
While reducing product variety may strengthen the welfare case by reducing unit costs, it also creates an environment where competitors with an innovative feature could be priced out of the market.
Customer loyalty often is lost when a competitor arrives with a feature that may be desired but not currently available.
Additionally, the increased desire for variety has been driven more by the ability to access individualized information about a given product. Much of this is status-driven, but much of it is happening because of things like simple preference/taste or a desire to support a local brand where a personal relationship exists with the creator.
This is my theory on fashion (for most people), perhaps it tends to be true for most forms of excessive variety. Still, there's probably some fitness signalling mixed in there too.
I don't follow. Are you suggesting that most product variety is within firms rather than between firms? If so then "commoditizing" so that all the firms make only a few interchangeable types wouldn't necessarily result in fewer firms. But if most variety is between-firm, then making products cheaper would require increases in scale, which would in fact indicate fewer producers.
Also, as an aside, I know you haven't suggested a scheme that could make this happen, but if you have any thoughts I'd be very interested to hear them.
Very roughly, how much of a reduction in cost would you estimate? Say the number of types of all products in all categories were cut in half? How much of a fractional drop of median living costs would you expect? 1%, 3%, 10%, 30%?
Do you think persistent variety in products does not represent the appreciation of almost all purchasers? I mean, absent being fooled.
Not if, as Robin believes, consumers' choices favoring variety are driven by social emulation. Then have a prisoner's dilemma situation. We all might prefer less variety for ourselves but only if there was less variety for others.
That's funny. You demonstrate that there is always an unusual way to interpret any statement.
Yes, the presence of a product doesn't prove that anyone likes it, for a short while. But, my statement is an observation, almost always true, not a premise for some detailed argument in philosophy.
A new product is an offering, not a coercion. The only way for the producer to make money is to gain the voluntary cooperation of the purchaser. If no one likes it, it quickly goes away.
About "market failures" like monopolies. In a monopoly, the customers like the product too much, even at the high price maintained by excluding competition. So, even a monopoly exists only because enough of the public likes the product. The customers often dislike the grant of monopoly, granted usually by government.
Do you think persistent variety in products does not represent the appreciation of almost all purchasers? I mean, absent being fooled.
This, the premise of your argument, is false. Many "market failures" involve what might be called unexpected consequences. ['People like monoplies or they wouldn't be there.']
Yes. As usual, the lack of variety is/was enforced by city and state governments granting monopolies to cable providers. The excuse was always to reduce costs.
Robin Hanson above: "This greatly strengthens the welfare case for reducing product variety, in order to reduce unit costs. It seems we are mostly trying to gain a zero-sum status via showing off our wealth and not-actually-there distinct identity."
I read that to support some sort of regulation to reduce product variety. The case for saving money (to increase our collective welfare) by reducing variety (how?) is strengthened by revealing that the desire for variety is a stupid attempt to show off.
The "how" is important. Variety has appeared in a free market. Reducing variety can only be done by either appealing to individuals to decide on a common preference (unlikely), or taking state action to limit stupid, individual preference.
A neutral analysis would be "people are dumb to choose variety". A collective-good analysis says "The evidence supports collective action to reduce variety and lower costs with little real harm to individuals". I read your last paragraph to be a call for collective action of some sort, that is, state regulation.
Reduced variety is quite compatible with competition in the case of _pure commodities_, i.e. similar products with no differentiation or private information. Pursuing this would mean mostly increasing standardization, as well as making public/socializing 'know-how' info that is now largely tacit, and thus (obviously) private to firms - and not even easily tradable.
(The latter goal is something that academia could probably work on; it would likely have a lot more value for dollar than most new research.)
Some segments of books plausibly have a large positive info externality, but for other segments yes the variety seems excessive from a customer welfare point of view.
I have not chosen nor am I supporting any particular regulatory regime, and there may ben such satisfactory regime, to reduce variety. I'm just analyzing existing markets.
As I said in the post, variety is usually thought of as increasing market power, so reducing variety doesn't need to lead to fewer firms competing to supply, and it definitely doesn't need to mean a monopoly supplier!
While reducing product variety may strengthen the welfare case by reducing unit costs, it also creates an environment where competitors with an innovative feature could be priced out of the market.
Customer loyalty often is lost when a competitor arrives with a feature that may be desired but not currently available.
Additionally, the increased desire for variety has been driven more by the ability to access individualized information about a given product. Much of this is status-driven, but much of it is happening because of things like simple preference/taste or a desire to support a local brand where a personal relationship exists with the creator.
This is my theory on fashion (for most people), perhaps it tends to be true for most forms of excessive variety. Still, there's probably some fitness signalling mixed in there too.
I don't follow. Are you suggesting that most product variety is within firms rather than between firms? If so then "commoditizing" so that all the firms make only a few interchangeable types wouldn't necessarily result in fewer firms. But if most variety is between-firm, then making products cheaper would require increases in scale, which would in fact indicate fewer producers.
Also, as an aside, I know you haven't suggested a scheme that could make this happen, but if you have any thoughts I'd be very interested to hear them.
Very roughly, how much of a reduction in cost would you estimate? Say the number of types of all products in all categories were cut in half? How much of a fractional drop of median living costs would you expect? 1%, 3%, 10%, 30%?
Do you think persistent variety in products does not represent the appreciation of almost all purchasers? I mean, absent being fooled.
Not if, as Robin believes, consumers' choices favoring variety are driven by social emulation. Then have a prisoner's dilemma situation. We all might prefer less variety for ourselves but only if there was less variety for others.
That's funny. You demonstrate that there is always an unusual way to interpret any statement.
Yes, the presence of a product doesn't prove that anyone likes it, for a short while. But, my statement is an observation, almost always true, not a premise for some detailed argument in philosophy.
A new product is an offering, not a coercion. The only way for the producer to make money is to gain the voluntary cooperation of the purchaser. If no one likes it, it quickly goes away.
About "market failures" like monopolies. In a monopoly, the customers like the product too much, even at the high price maintained by excluding competition. So, even a monopoly exists only because enough of the public likes the product. The customers often dislike the grant of monopoly, granted usually by government.
Do you think persistent variety in products does not represent the appreciation of almost all purchasers? I mean, absent being fooled.
What if variety is indispensible for much conspicuous consumption ("signaling")?
Then, would abolishing it require alternative incentives? That is, how do you get people to work if they lack ways to be ostentatious?
People like variety, or it wouldn't be there.
This, the premise of your argument, is false. Many "market failures" involve what might be called unexpected consequences. ['People like monoplies or they wouldn't be there.']
Yes. As usual, the lack of variety is/was enforced by city and state governments granting monopolies to cable providers. The excuse was always to reduce costs.
Robin Hanson above: "This greatly strengthens the welfare case for reducing product variety, in order to reduce unit costs. It seems we are mostly trying to gain a zero-sum status via showing off our wealth and not-actually-there distinct identity."
I read that to support some sort of regulation to reduce product variety. The case for saving money (to increase our collective welfare) by reducing variety (how?) is strengthened by revealing that the desire for variety is a stupid attempt to show off.
The "how" is important. Variety has appeared in a free market. Reducing variety can only be done by either appealing to individuals to decide on a common preference (unlikely), or taking state action to limit stupid, individual preference.
A neutral analysis would be "people are dumb to choose variety". A collective-good analysis says "The evidence supports collective action to reduce variety and lower costs with little real harm to individuals". I read your last paragraph to be a call for collective action of some sort, that is, state regulation.
I apologize if I misinterpreted that.
Reduced variety is quite compatible with competition in the case of _pure commodities_, i.e. similar products with no differentiation or private information. Pursuing this would mean mostly increasing standardization, as well as making public/socializing 'know-how' info that is now largely tacit, and thus (obviously) private to firms - and not even easily tradable.
(The latter goal is something that academia could probably work on; it would likely have a lot more value for dollar than most new research.)
Some segments of books plausibly have a large positive info externality, but for other segments yes the variety seems excessive from a customer welfare point of view.
See my response to Andrew above.
I have not chosen nor am I supporting any particular regulatory regime, and there may ben such satisfactory regime, to reduce variety. I'm just analyzing existing markets.
As I said in the post, variety is usually thought of as increasing market power, so reducing variety doesn't need to lead to fewer firms competing to supply, and it definitely doesn't need to mean a monopoly supplier!
Would you favor less variety in books?