"The efficient-market hypothesis is a hypothesis in financial economics that states that asset prices reflect all available information." from Wikipedia.
There is a huge price spread on nearly-identical products because people don't have enough information to determine which of the various supposedly equivalent products available are more reliable, efficient, safe, etc. and this is reflected in people spending more than necessary.
If, in fact, a particular brand was consistently more reliable than others but priced at a premium then with perfect information everyone would know this and a new manufacturer could introduce a similarly-reliable product at a price point within the spread and everyone would buy that instead.
> There is a huge price spread on nearly-identical products because people don't have enough information to determine which of the various supposedly equivalent products available are more reliable, efficient, safe, etc. and this is reflected in people spending more than necessary.
Information about a product is part of the whole package. It's ok that people pay extra for it.
You even get effects like what you describe in some of the most efficient markets. Eg aluminum that's traded on the exchanges often sells for a different price than over-the-counter deals. See https://www.bloomberg.com/opinion/articles/2014-11-20/the-go...
That doesn't mean that the market for aluminum is not 'efficient'. It's just a bit weirder than a naive look at the physical properties of the ostensible good, aluminum, would let you to believe.
Basically your critique says 'there's this subset of physical properties that is the same for two products, but they sell for different prices; hence the market must be inefficient'. But products aren't always made up of their physical properties alone.
Eg suppose I have a business selling sheets of paper with the winning lottery numbers of five years in the future. This is a product with a lot of information asymmetry: you can only judge its quality five years after buying it. To make it more extreme, assume that my predictive powers aren't quite so awesome: I can't divine guaranteed winners, I merely manage to produce lottery numbers that are a thousand times more likely to win than your average number. Still a useful product, but even harder to judge by individual customers.
Now a competitor springs up who sells the same sheets of paper with numbers printed on them. It's just that my competitor's numbers are no better than chance.
The physical properties of the paper and ink are exactly the same. They even use the same font. A lab couldn't tell them apart.
Would you insist that both suppliers' products should sell for the same price?
Now assume that I don't even print my own sheets: I just buy them in bulk from the other supplier, but I only resell the sheets that have the increased chances.
Now the sheets really are identical, and the only difference is my reputation for quality.
I hold that an efficient market will have different prices for this ostensibly identical goods.
> If, in fact, a particular brand was consistently more reliable than others but priced at a premium then with perfect information everyone would know this and a new manufacturer could introduce a similarly-reliable product at a price point within the spread and everyone would buy that instead.
> Now the sheets really are identical, and the only difference is my reputation for quality.
The information I value isn't related to the product you are selling, however, unless you also run the lottery (which would lead me to be highly suspicious). I'd pay roughly the same price for the same information on any medium, and it would be directly related to your reliability and not your reputation. E.g. you may have a reputation as a soothsayer, wizard, Oracle, or be named Omega but I will not bid more than the value of the lottery times your predicted accuracy (assume you sell only one prediction per lottery at auction, and your accuracy is the ratio of correct predictions to total predictions sold, to ignore the effect of multiple buyers+winners). Your brand reputation is your accuracy, not pieces of paper.
The closest analog I can think of is paying for a subscription to Consumer Reports to determine which lightbulb lasts the longest, for example. The information is decoupled from both the products and the manufacturers; the MTTF of a particular run of lightbulbs is simply a property of the world to be discovered. Given that a Consumer Reports subscription is less costly than the price difference on a basket of goods from reputable brands vs. generic brands suggests that consumers are not reaping an accurately priced benefit from brand reputation.
My theory is that most customers/consumers don't have the time and energy to invest into microeconomics (or reading CR) and therefore can't achieve an efficient market in the same sense that you or I could, or that large organizations can. Microeconomics requires approximations of rational actors and most people are not, and therefore business strategies incorporate this information in their pricing and advertising.
Another example is Costco which has generous return policies, sells with lower margins than most retail stores, and still makes money. Clearly they must be incorporating more information than is available by brand reliability or they would lose money on returns or sales or both. Likewise, they are charging a nominal membership fee for the job of collecting and acting on information about product quality that is isolated from the actual pricing of the products they sell. In practice, they work with existing manufacturers to rebrand their products as Kirkland at a lower price than the brand name, directly exploiting the arbitrage. There's probably still a fairly moderate price spread but it becomes harder to exploit with the cost of additional research and risk of asking for prices that are too low from the Kirkland suppliers. To survive (and thrive) they only have to pick a price in the middle of the spread where their popularity still allows manufacturers to make a sufficient profit that they put up with the dilution.
Where the market fails is in the creation of new industries that are willing to invest in manufacturing and selling products in the spread between the lowest cost junk and Costco prices. There is still money to be made there but customers won't have enough information to know that it's the most efficient option for them. It's the difference between saving pennies or millipennies on production costs vs. additional months or years of reliability that people would pay an entire extra dollar for, but practically pay several more when trusting brand reliability.
What's the definition of 'efficient' you want to be using here?