The Girl Scouts are in the news again, this time for ruthlessly exercising market power:
Girl Scout cookies sell for different prices in different areas. The going price is either $3.50 or $4.00 depending on where you live. Local Girl Scout councils are actually allowed to set any price they want…
Well, perhaps not ruthless. The author incorrectly titles it “price gouging,” when in fact it is simply a form of third-degree price discrimination, I suppose. I would be interested in seeing data on different prices across different markets. Do you think the different elasticities of demand stem from differences in income? Differences in tastes? Differences in close substitutes? Why isn’t there entry to wipe away the excess profits? I could spend the rest of the day thinking about this (and probably will).
For you 450 readers, perhaps there is an arbitrage opportunity out there for a would-be (Kirznerian) entrepreneur.
I am definitely going to check the price before I commit to Girl Scout cookies for the Economics TeaBA.
Speaking of the TeaBA, see you Monday at 4.