Indeed talking about Wii price cut, 5 minutes of wikipedia told me PS3 and Xbox also got their price cuts just few weeks later, Nintendo was just following suit
Perfectly matches with kinked-demand theory model about price cuts:
"If the oligopolist reduces its price below P, it is assumed that its competitors will follow suit and reduce their prices as well. The oligopolist will then face the relatively less elastic (or more inelastic) market demand curve MD 2. The oligopolist's market demand curve becomes less elastic at prices below P because the other oligopolists in the market have also reduced their prices. When oligopolists follow each others pricing decisions, consumer demand for each oligopolist's product will become less elastic (or less sensitive) to changes in price because each oligopolist is matching the price changes of its competitors."
Also perfectly explain why nobody is getting price cuts this gen. They are just following the cartel model where everybody is about satisfied with their current sales/revenue and realized price cuts only lead to long therm lose in revenue rather than long therm increases (second hand experience from past generations)
Edit: I'm also dropping this discussion here because it's derailing the thread. I think we can create another if you find this subject interesting just don't belong here
Last edited by IcaroRibeiro - on 07 July 2021
