[econophile]

btw, the video game console market is far from perfectly competitive. there are 3 major firms, and each likely has significant market power (this means they can raise the price of their product above the perfectly competitive price and still make a profit).

the relationship between console price and video game sales also poses an interesting pricing problem. if people are hesitant to buy a console, but will buy many games once they have a console, it could be in a firms best interest to give the consoles away. while the firm would lose money with each console sold, the profits from video game sales could make up for it.