Monday, August 06, 2007

The government’s challenge is to find out some secrets

Books 2 Byte
The Undercover Economist
Tim Harford

Ever wondered why the departure lounges in most airports are shoddy? “If the free departure areas became comfortable, then airlines would no longer be able to sell business-class tickets on the strength of their ‘executive’ lounges,” reasons Tim Harford in The Undercover Economist (

He finds the phenomenon in supermarkets, too; the own-brand ‘value’ range may display ̵ 6;crude designs’… only “to put off customers who are willing to pay more.” A surprising example from the world of computers, on similar lines, is IBM’s LaserWriter E – a low-end laser printer, which “turned out to be exactly the same piece of equipment as their high-end LaserWriter – except that there was an additional chip in the cheaper version to slow it down.”

To get anyone to buy the expensive printer, IBM had to slow down the cheap one, explains Harford. “It seems wasteful, but presumably it was cheaper for IBM to do this than design and manufacture two completely different printers.” Likewise, Intel had to spend more to produce an inferior chip: “it was made by taking the superior chip and doing extra work to disable one of its features.”

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