Posts tagged 'Google Reader'

What Google Reader tells us about banking and nationalisation

Paul Krugman has penned a rather wonderful explainer on the economics of Google Reader, and why it makes economic sense for Google to shut down a much-loved service like Reader even if people say they are prepared to pay for it.

Krugman actually picks up where Ryan Avent left off, but the following paragraph does a good job of nailing the problem:

Basically, if the monopolist tries to charge a price corresponding to the value intense users place on the good, it won’t attract enough low-intensity users to cover its fixed costs; if it charges a low price to bring in the low-intensity user, it fails to capture enough of the surplus of high-intensity users, and again can’t cover its fixed costs.

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