Well, what d'you know: Raising e-book prices doesn't raise sales

Perhaps there is life in that dog of a neoclassical price system


There's another fun little example of much the same point concerning Google searches. Apparently, as gas (petrol) prices have fallen people are worrying less about the MPG of cars they might buy.

We see this in the Google searches they make:

With gasoline prices heading into Labor Day at the lowest level in more than a decade, Americans’ enthusiasm for fuel economy is waning.

Google searches for “MPG,” shorthand for the fuel-economy measure miles per gallon, decreased 32 per cent in the last week of August compared with two years earlier, according to the data from the technology giant.

That nearly matches the 33 per cent fall in the price for a gallon of regular gasoline during that time.

The Google data shows a tie between movements in gasoline prices and interest in “MPG.”

When gas prices edged up this spring from winter lows, as is typical for the season, fuel-economy searches rose, even though gasoline prices were down almost a dollar from a year earlier.

And most unsurprisingly they worry less when they go out and actually buy a car:

Sales data bears that out. Sales of the Volt, once viewed as a key element in General Motors’ post-bankruptcy rebirth, fell 37 per cent through August compared with the prior year.

Sales of the Leaf are down 35 per cent. Prius Hybrid sales slid 17 per cent and Focus sales slumped 6 per cent.

Meanwhile, the Chevrolet Silverado full-size pickup sales rose 18 per cent through August compared with the same period in 2014. Purchases of cars such as the Ford Mustang and Dodge Challenger are growing rapidly this year.

And the Honda Pilot, Nissan Murano and Toyota Highlander, all sport-utility vehicles, have posted double-digit sales increases so far this year.

Demand curves slope downwards: as the price of fuel drops people are willing to consume more of it.

Yes, of course, there's still large areas of controversy in economics.

Over in macroeconomics there's still not one single major theorem that you could get every currently living Nobel Laureate to sign up to. And there's obviously also still areas in microeconomics where people are still snarling at each other. But we do seem to have areas where that standard 101 stuff does retain great explanatory power.

If and when prices rise people will buy less of that good and substitute out to something else. Meaning that those who have raised prices face falling profits and might be tempted to reverse course.

And when prices fall people seem willing to consume more of that good. Demand curves really do slope downwards. The core basics of the subject do seem to be a reasonable fascimile of how this universe actually operates.

Hurrah! Etc: thus policies which seek to deny this simple truth seem unlikely to work very well. Rent control for example, raising the minimum wage substantially, import tariffs to artificially raise prices ... you know, the policies that so many people are actually advocating right now?

... sigh ... ®

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