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Technology subverts more markets
It looks like it is not just consumers who are unable to make informed rational decisions when faced with technology. It appears that Indian cotton farmers have a similar problem when faced with choosing GM seed varieties. In this case as they would clearly wish to choose according to rational criteria, but they cannot.
No doubt some economist will be able to stretch the word rational to cover the situation, but given that neither the farmers or their customers get what they want, it seems silly to pretend that the market is delivering what it should.
In essence what is happening is that faced with the complexities of evaluating a huge number of different seed varieties, farmers are unable to evaluate them systematically, and are choosing what gossip suggests is good. This in effect creates fashions in seed. I am fairly certain that farmers want profitable seeds, not fashionable ones, so resorting to fashion will not give them what they want.
Are the defenders of market mechanisms going to argue that farmers get sufficient satisfaction from having the latest fad brand (like teenager buying a dress) to make up for their loss of profits?
The best part of this is the marvellous business opportunity it creates for seed companies. When one of their products become unpopular, they can change the brand name and persuade farmers, who think it is a new variety to buy it again. With a bit of luck it might become the fad this time round.
What a far superior way of “competing” this is. When your customers realise that a product is no good, you do not need to reduce the price or come up with a better product. Instead you simpy give it a new name and have another go. Think of all the money saved on R & D and the better margins. Free markets really are wonderfully efficient mechanisms.
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