The zero bound on blog prices

Via MR, Cheap Talk explains why the optimal price for most blogs is negative, and how the distortion of the zero lower bound on prices is compensated for:

Now, typically when incentives are blunted by a binding constraint, they find expression via other means, distortionary means. And a binding price of zero is no different. Since a blogger cannot lower his price to attract more readers, he looks for another instrument, in this case the quality of the writing.

Absent any constraint, the optimum would be normal-quality writing, negative price. (”Normal quality” of course is blogger-specific.) When the constraint prevents price from going negative, the response is to rely more heavily on the quality variable to attract more readers. Thus quality is increased above its unconstrained optimal point.

So, the next time you are about to complain that the blogs you read are too interesting (at the margin), remember this, grin and bear it.

I enjoy the conceit that my blogging is inefficiently high-quality, but the data shows that I haven't defeated the distortion yet.