Why Tie Showing to Selling?
Of course, such a firm would have to pay its bills. But why not do it by selling services rather than autombiles? Why not simply charge me fifty dollars an hour, or whatever other sum is consistent with their costs and my value, for helping me choose a car? They could then, as an additional service, help me search, online and elsewhere, for the seller with the best price. The advantages of such a firm have declined in recent years, as auto malls become more common--places where you can visit half a dozen dealers within a mile or so. But it still seems as though it would be useful.
I was reminded of this old puzzle recently in a different context. As I have mentioned here, not long ago I identified a high end smart phone that looked as though it was just what I wanted, bought it, and ended up sending it back. Even more recently I have identified another candidate, the HTC Advantage 7501. Judged by its specs, it is more or less the ultimate smart phone--quad band as a phone, triband as a 3G data device, with a full VGA screen, built in GPS, and its own micro hard drive. It is big for a cell phone--but not so big for a miniature computer. Its weight--about 13oz--is almost exactly the same as the weight of the Psion 5mx, the pda I carried for some years and became very fond of.
The Advantage is, however, an expensive device and a somewhat odd design (see the link for details), so I am unlikely to buy one unless I can first get my hands on it, and perhaps not then--there will be other high end smart phones coming out over the next year, so perhaps if I wait I can get something even better.
Which brings me back to my question. I live in Silicon Valley. Why isn't there, somewhere nearby, a showroom for high end cell phones, not limited to any single company, supporting itself by charging by the hour for access? Not only would that let me look at the Advantage, it would let me compare it to competitors. So far as I know no such thing exists, although I will be happy to be informed that I am mistaken.
The pattern I observe in both markets, showing services bundled with selling services, is a common one--indeed, in the economic literature, it is sometimes used to explain otherwise puzzling practices such as resale price maintenance. What I don't see is why that pattern is so common. After all, if I buy a car, or a cell phone, from a dealer that also provides a showroom, I'm paying for the showroom implicitly in the price of the car or phone. So why not separate out the two products and price them separately?