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will increase overall economic utility because that increase only goes to others.

If for example a car company that produces a million cars at a marginal production cost of €8,000 per car and sells it for €10,000 decides to reduce its price to €9,000 because it reckons that they’ll still make an additional €1,000 per car when they sell to the 200,000 customers that are only willing to buy it if it costs €9,000 (plus a little extra in consumption taxes and car dealer margins). In this case, the previous million customers gains €1 billion from a lower price, the value of the new customers of the cars will be €200 million more than the cost of producing the cars. For the company however, its revenues will rise from €10 billion to €10.8 billion, while the cost of production will rise from €8 billion to €9.6 billion. As revenues because of the lower price for previous customers only rose €800 million thanks to the 200,000 extra cars, the marginal revenue was only €4,000 per car, lower than not only the price of €9,000 but also the cost of production of €8,000. As a result, the company actually lost €800 million from the price cut. Yet as that €800 million loss is lower than the total concumer gain of €1.2 billion, society as a whole would have seen its wealth rise €400 million.

This can also be illustrated in a chart

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