Consumers do not have perfect information of companies’ costs of production, they compare the prices of the products they prefer with their historical prices and their substitutes’ prices to judge if the prices are “reasonable”. Moreover, a product has different utilities to different people, as people have different preferences and individual characteristics. However, people can influence each other and under others’ influence, people’s beliefs of products’ utilities can change from time to time.
Some products have certain virtual utilities, for example, some paintings are believed to be suitable for collection. Fashion or taste builds many products’ utilities. And taste and fashion can be spread across people, and the prices for taste and fashion can vary according to people's demands. However, once in a sector, there is only one mainstream taste, the price for this taste can be extremely high, as the taste becomes a monopoly in the market.
If we can have many different tastes in a sector, the prices for these tastes can be different, as the tastes can be differentiated as well, just like products. Tastes can be differentiated according to different social classes or age groups. The groups with relatively low consumption power will receive cheaper tastes.
Therefore, although introducing more taste and fashion does not directly reduce the prices, they can help to increase the introduction of cheaper brands of products.
If we can have many different tastes in a sector, the prices for these tastes can be different, as the tastes can be differentiated as well, just like products. Tastes can be differentiated according to different social classes or age groups. The groups with relatively low consumption power will receive cheaper tastes.
Therefore, although introducing more taste and fashion does not directly reduce the prices, they can help to increase the introduction of cheaper brands of products.
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