January 17, 2003
Demand Side Economies of Scale

Usually, when we economists talk about "economies of scale," we are referring to supply-side productive economies of scale: marginal costs lower than average costs, so that producing more makes average costs lower. But there are other economies of scale. Here's an example of user-side demand-side economies of scale--and how one Boston Phoenix writer is finally switching to Microsoft Word:


Welcome to the Boston Phoenix- Boston's Alternative Source for Arts and Entertainment: It's Bill Gates's planet. The rest of us are just visiting. For many years now, I've been able to lead a digital life pretty much free of Microsoft's bloated, expensive products. I use a translation program called MacLinkPlus so that my MS Word-using editors can read my AppleWorks-generated files, and though the solution isn't perfect, it's been good enough.

Now, though, I'm dealing with an editor who wants me to be able to take advantage of Microsoft Word's "Track Changes" function. I've never seen it, never mind used it, but apparently it will allow him to make comments and changes on my files in one color, and for me to respond in yet another color. Actually, it sounds pretty cool. But no matter how we've tried to translate each other's files, it comes up in black and white on my screen.

The point is that the single biggest value of having a standard is that -- well, it's a standard. Much as I prefer AppleWorks, as long as 95 percent of the universe is using Word, my recalcitrance makes life more difficult both for my editors and myself. I probably can't hold out forever. And thus does Bill Gates chalk up another small victory...

Posted by DeLong at January 17, 2003 12:00 PM | Trackback

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and unlike most economies of scale, it's hard to see where the diseconomies kick in with Word and Excel and Windows . . . . . . . when the network effects fully-engage, it's a sight to behold.

so if you buy any internet stock ever, buy EBAY !

Posted by: Anarchus on January 17, 2003 02:14 PM

He should dig his heels in and get his editor to do what I've done when writing commentary into others' electronic text.

Use an alternate font and underline it. Underlined text is awful in final products but very useful for comments.

Posted by: Michael Harris on January 19, 2003 05:12 PM
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