So in reference to my other post from today, I just wanted to say how amazing perfectly competitive markets are. At least for the consumer, that is.
Economics teaches us that in a perfectly competitive economy, price-taking firms will set their prices equal to their marginal costs (the cost to produce one additional unit of a good). Total economic profit for a price-taking firm will be zero. Now you never actually have this situation, because what firm would want to enter a market to make zero profit, but the principle stands as a fairly solid theory.
The web hosting industry is certainly competitive. It's probably not perfectly so, but the fact remains that it's overcrowded with firms and possibilities. The fact that I was able to get three years of free hosting definitely shows just how competitive it is. When I signed up, I got 500MB of webspace, 50 50MB email accounts, and a 5GB/mo transfer limit. Over the summer, the package was up to 4GB of webspace, 1,000 1GB email accounts, and a 100GB/mo transfer limit. Now I get 30GB of webspace, 3,000 2GB email accounts, and a 1,500GB/mo transfer limit. I can't imagine what they'll give me in a year. My own server?
Leave a comment