XBox economics, Part II
Last week I wrote that the shortage of Xbox 360 consoles seemed inexplicable, at least to me and my fellow economists. I invited readers to provide better explanations, and you did.A reminder of the puzzle: Xbox 360s are the latest in a long line of Christmas products to suffer spectacular shortages. The shortage of supply isn’t the puzzle; the low price is. Why doesn’t Microsoft raise prices temporarily from the current floor of $300 for a basic console? Why doesn’t the company auction them all on eBay, where consoles are currently reselling for $700 and up?
If I had a dollar for every e-mail I received on the subject, I’d be able to afford an Xbox myself. Most of the suggestions I received were wrong, but a few got me thinking, and they may get you thinking, too.
Continued at Slate.com