158 PETER ACTON
can win a price war and everyone will be worse off until attrition restores
equilibrium.
Importantly, it makes no sense for a pottery workshop to expand beyond
a team of five or six people supporting a single potter. The size of a kiln was
limited by heat retention technology and an analysis of throwing times and
capacity shows that, in the seven hours it takes for one firing, a single potter
can make enough items of any shape to fill a kiln.^50 The only way for a pottery
operation to expand its size beyond six or seven workers would be to work
two shifts (one of which would have to be in the dark for most of the year)
or to add a second kiln. Either approach doubles the number of workers, but,
even if the second kiln or shift can be kept as busy as the first one, there is
scarcely any reduction in unit costs since all input costs (slaves, wood and clay)
vary directly in line with output. If the second team cannot be kept as busy,
then average cost per unit will increase. To keep these additional productive
assets busy and unit costs as low as the first team, the workshop has to double
sales (Fig. 6.4).
The owner faces the challenge of how to achieve the required increase in
market share. As his product is indistinguishable from anyone else’s, he will
need to cut his prices, but whoever loses the business is certain to retaliate,
since, if they do not win the business back, they are left with the same costs
as before but less revenue. This price war can be extremely damaging. After it,
everyone, including the expander, will have made less than the usual returns
in the industry by the amount the price war cost them. This is an eventual-
ity that the Athenians were well aware of: consider the following remarks of
Xenophon (Vect. 4.6 tr. Waterfield):VolumeCost/UnitNumber of slaves(^510)
10
15
15