alt Hacker NewsThe conjecture assumes durable goods, so it doesn't apply to medicine. Also no resale, so that narrows the scope even more.
The gist of the conjecture is that if the customers can wait out for price drops and the monopolist wants to sell their thing, then after a few rounds of "he knows that we know that..." the price ends up to be the marginal cost.
Now, real world disagrees with the model, so next steps are to examine why this happens and maybe discover some new economic interaction.
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Sorry but what goods are more durable than a pill and cannot be resold?
EDIT: I now understand “durable” to mean “something that lasts long”, whereas I thought it just meant “non-perishable” (ie not fruit or flowers).
Gotta admit I still don’t understand how the original theory resonated with anyone though. I can’t even come up with an example. What monopolist sells a durable good? Games aren't a monopoly. Most other monopolists sell subscriptions or consumables (eg a train ride).
The elegance of the conjecture seems overstated, and looks like dressed-up ideology.
The conjecture requires a theory of time in the form of periods/rounds to reduce price to zero - but wants to ignore time when it comes to information spread and product value.
Pinning a variable to any 1 extreme can be very informative, but when the variable has to both exists to justify the presumption, but also be ignored in the model - you're not going to find an elegant basis for a grand-theory-structure to add corrective terms onto.
Instead, you'll just get a mess of variables from over-fitted data.