Bellerbys Economics - Mr Stephenson

Friday, September 07, 2007

iPhones - Apple Suicide Bid Part 2 - Emergency Treatment

Further to the recent posting here about how Apple were developing a level of control in the market which enabled them to create abnormal profits:

We learn today that Apple have decided to cut the price of iPhones by $200 today - a significant victory for 'property rights' - the phrase we use when we mean that the consumer is able to exert moral, social or legal pressure on an organisation to change its behaviour. This is more commonly used in the field of externalities - but can also be applied in other cases of market failure.

In fact, the 8-gigabit version has been slashed in price by $400. Steve Jobs, the President of Apple, has even said he will pay back any customers who have 'overpaid' for the product.

Apple have clearly decided that the special relationship they have built up with their customers over many years - the brand image - is worth preserving as it will safeguard future earnings - or maybe it's because Steve Jobs is just a nice person.

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