Comment by demosthanos
2 months ago
> Most other fields of endeavor aren’t compensated based on the black market value of the thing that’s being produced.
> If we apply your analysis to other things
This analysis doesn't work for a few reasons:
* For physical goods, used items always fetch a lower price than new items due to unrelated effects. And if we're only looking at the used price, we do find that the black market price is just about equal to the used item's value minus the risk associated with dealing with stolen goods (unless the buyer is unaware of the theft, in which case the black market value is the same as the used value).
* For both physical and digital goods, there are millions of potential customers for whom breaking the law isn't an option, creating a large market for the legal good that can serve to counter the effect of the black market price. This isn't true of exploits, where the legal market is tiny relative to the black market. We should expect to see the legal market prices track the black market prices more closely when the legal market is basically "the company who built the service and maybe a few other agencies".
> For physical goods, used items always fetch a lower price than new items
This is only true under certain circumstances. If there are supply chain issues, used prices can go up and over the list price. The most extreme (and obvious) example I've seen is home gym equipment during the Covid lockdowns, particularly for stuff like rowing machines.
The other potentially less obvious example is seen in countries that don't have a local presence or distributor for a given item, and the pain and slowness of importing leads to local used prices being above list price.
One other potentially interesting semi-related point: prices for used items can sometimes increase in unexpected ways (excluding obvious stuff like collectables, art, antiques etc). In the UK, the used price for a Nissan Leaf EV started increasing with age after the market realised that fears about their battery failing ~5 years into ownership were unfounded urban myths, and repriced accordingly.
> If there are supply chain issues, used prices can go up and over the list price.
The comment you're replying to isn't referring to list price, they're referring to the price of a new item.
Supply chain issues, as we saw during COVID, affect the cost of new items by making them effectively infinite: if there are only 100 new rowing machines available and 1000 people want them, then for 900 people, the list price of a new rowing machine is irrelevant because they can't actually buy it at that price.