As noted previously, 'Greatest Hits/Platinum Hits/Player's Choice' titles have already sold a significant number of copies and have made plenty of money for all those involved. These re-releases help publishers continue to make money after sales have slowed down by attracting price conscious consumers. They also help publishers fight used game sales and piracy -- two activities which they don't make any money from.
The manufacturing of most games is relatively cheap. (The exception at this point in time would be large DS games since the carts cost more than disc-based media.) Licensing fees and royalties are often linked to the MSRP of a game. So games that sell for less mean that everyone (console manufacturer, publisher, developer, retailer, etc.) is making less money on the titles. So while they make less for each unit, they hopefully make up for it in additional volume.
Edit: Here's a great chart of the expenses on a $60 game:
http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_slide_2.html
Numbers are like people. Torture them enough and you can get them to say anything you want.
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