The entire luxury market disagrees with this. This isn't a small market: companies like Louis Vuitton, BMW, etc (and even arguably Apple) are huge, profitable entities selling large numbers of goods to large numbers of people.
Even outside the luxury market there are numerous other factors, not least of which include: distribution, vitality, marketing etc.
Edit: Also there are at least three Nobel prizes showing how marginal value isn’t what matters in making choices (Nash, Kahneman, Thaler)
Distribution and marketing are good points. Inferior products with better marketing and distribution sometimes win out especially when they partner with monopolistic/oligopolistic channels.
What do you mean by 'vitality'?
Luxury products provide social signal value rather than pure performance.
I agree that imperfect rationality is a major factor in human decision making and perhaps should be included into the model somehow.
I'm not sure how Nash's game theory is related to this. Care to elaborate?
PS. I didn't downvote you and feel that too much downvoting, sometimes unwarranted, occurs on HN lately.
Luxury products provide social signal value rather than pure performance.
Social signaling is often (usually? Outside subsistence cases - there are some good studies showing how this switches over) more important than performance.
Sometimes performance and social signaling are correlated, but they don't have to be.
I'm not sure how Nash's game theory is related to this. Care to elaborate?
A product marketplace is pretty much the perfect example of a non-competitive game. Indeed, the New Yorker used is as one:
The setting could be nuclear negotiations, such as the ones currently taking place between Iran and the great powers. It could be a product market, in which a number of firms compete for business.[1]
This is a relatively mature field, and there are some fairly comprehensive ways of expressing the likelihood of success of a product.
Unfortunately your formula doesn't capture anything like enough of the complexities of a market place.
But hey - it is simple, and you typed it quickly, and it seems like it could be right so nothing else matters, right?
Virality without value advantage tends to be short-lived.
Social signaling is part of the ‘value’ in my model.
The utility of existing competition and their costs are included in the term ‘marginal’.
I am aware that my simple model, occurring in a couple minutes, is incomplete that’s why I asked for refinements. Including factors like distribution & marketing seems very useful. However, capturing imperfect rationality does not seem possible for a simple model.
Do you have references to the ‘fairly comprehensive ways of expressing the likelihood of success of a product’?
Even outside the luxury market there are numerous other factors, not least of which include: distribution, vitality, marketing etc.
Edit: Also there are at least three Nobel prizes showing how marginal value isn’t what matters in making choices (Nash, Kahneman, Thaler)