> Or. And I know this is radical. But stop selling the 6 core and sell the 8 core for the price of the 6.
But you still get some 6 core parts-- just not enough to meet demand.
In general, suppliers prefer modulating the mix of supply of their products entering the retail chain over endlessly modulating pricing to try and match demand.
> Why are we justifying these corporations taking us for a ride?
Well, one fundamental underlying reason is that deadweight losses fall when you are able to segment markets and adjust pricing for each (price discrimination).
> The demand for 6 core over 8 core is simply because the 6 core costs less than the 8 core. If the 8 core cost the same as the 6 core, you'd buy the 8.
I don't really understand your comment in the context of our discussion-- we're talking about price discrimination. The whole point is that you have different prices for different segments to match demand. So, yes, of course.
Initially, you set the 6 core price and 8 core prices to match actual production yields.
Later, as your yields improve, you use the different SKUs for price discrimination, which captures some of consumer surplus (ewww) and eliminates deadweight losses (yay).
> I'm saying get rid of the 6 core product line when it's just as effective to artificially limit the better product just to have inventory.
Not everyone is willing to pay the same price. If there's a market for 100k processors at $200 each, there could easily be a market for 50k slower processors at $150 each and 80k processors at $250 each. If yields are 95% at 8 core and 100% at 6 core:
* The firm gets to make $7.5M more revenue
* The firm avoids waste of about 5000 processors in the single-price, 8-core-only scenario.
* The world gets 30,000 more processors vs. what the firm would make if they only could choose one price to optimize income
* The firm has flexibility on meeting demand: they can alter the mix of 8 and 6 core processors they sell instead of frequently modifying price.
This is a simple scenario, but it shows the reason for price discrimination: it generates more revenue and it also encourages a monopoly or a participant in monopolistic competition to make more product.
30,000 people who wouldn't have gotten a processor in the prior case now get one, and 20,000 people who would have otherwise gotten a high cost processor now spend less money.
But you still get some 6 core parts-- just not enough to meet demand.
In general, suppliers prefer modulating the mix of supply of their products entering the retail chain over endlessly modulating pricing to try and match demand.
> Why are we justifying these corporations taking us for a ride?
Well, one fundamental underlying reason is that deadweight losses fall when you are able to segment markets and adjust pricing for each (price discrimination).