Intangible investment behaves differently
1) The first two paragraphs about &#x27;assumptions&#x27; are essentially false. There are no assumptions in supply and demand, it&#x27;s not a dynamic equilibrium, it&#x27;s a snapshot.<p>Yes - over time supplies tend to change due to demand, of course, but that&#x27;s &#x27;long run&#x27; stuff ... not in that chart. The author is kind of misinterpreting the chart.<p>2) It&#x27;s not &#x27;sunk cost&#x27; that&#x27;s the issue, this is about &#x27;fixed&#x27; vs. &#x27;unit&#x27; cost. Software is all &#x27;fixed&#x27; (i.e. setting up the production line) whereas most material things are mostly about &#x27;unit&#x27; costs (i.e. the cost to make an item)<p>3) Software sales are a tiny fraction of the economy because <i>almost nobody is selling software</i>. People are selling &#x27;services&#x27;, basically products that &#x27;do stuff using software&#x27;.<p>The &#x27;key ingredient&#x27; is usually some type of business or experiential knowledge, not some algorithm.<p>4) Software development doesn&#x27;t finish at v1, it&#x27;s ongoing.