Let us say that someone writes a piece of software and licenses it under the GPL. Then they go on to sell it. Will this be effective? Won't someone just buy it and redistribute at a lower price? Do any of you know GPL licensed software that is being sold?
Also if you know of any instances where someone bought such software and redistributed at a lower price/free please share it here.
Although GPL does allow for commercial software, you are right in suggesting that this may not be very profitable as your customers are within their rights to distribute the source code of your project for no cost. This article seems to comprehensibly explain GPL's "incompatibility" to commercial software.
So most companies who distribute software under the GPL choose a dual-licence schema where the second licence secures their commercial interests. Other companies choose to not sell the actual GPLed product and concentrate on making profit selling related services (as professional support) or extensions to the core product.
Good examples of profitable projects that are also distributed under the GPL are MySQL, BerkeleyDB and Asterix. There are others, those just sprung to mind.
Actually writing software, licensing it under GPL, and then selling it is unlikely to be very profitable, although it can be done, and using a dual-license system where the Enterprise license has some manner of benefits for the buyer beyond getting the actual product can certainly work. (Some have already been mentioned by Yannis, but as an example, SQLite takes it one step further and publishes in the Public Domain, but sells membership in a Consortium.)
A more profitable variation over the theme is probably taking GPL-licensed software, packaging it, often adding some bits that are Proprietary, and then selling the resulting bundle, or, as it is often called, Distribution. Quite a few Linuxen are distributed in this fashion.
