weird economics

[cellio]

My employer provides free drinks, including soft drinks, but because ours is a small office we have to do our own buying. When supplies get low somebody goes to the store, which requires carrying cases of pop a couple blocks. Particularly during the winter this sometimes broke down, so that got us to look at options.

It feels wrong that it is cost-effective to buy our drinks from Amazon. That really shouldn't work. It can be less expensive to buy locally if there's a sale, but otherwise it's a wash -- and an Amazon box comes to our door.

Huh, weird.

Comments

[goldsquare.livejournal.com]

Monopsony pricing?

[cellio]

I learned a new word today. Hmm, could be. I wouldn't have thought of their "pantry" as being that dominant yet, but perhaps I'm mistaken.

[sanpaku.livejournal.com]

Definitely. http://www.nytimes.com/2014/10/20/opinion/paul-krugman-amazons-monopsony-is-not-ok.html?_r=0

[goldsquare.livejournal.com]

And doubly so for Wal-Mart.

It's normal for a larger business to try and negotiate a better price in exchange for access to their larger market. It's when you cannot say NO that it is a monopsony.

In books, Amazon is a monopsony at this point. In soda? Maybe, maybe not.

But Amazon has undoubted market power: whomever is willing to provide them with a product, will sell some product. Nationally, there are many soda bottlers. If one is weaker and will sell at a lower price, or has lower costs and can afford to sell at a lower price, Amazon will buy from them.

Technically this is market efficiency, and pro-consumer. It's why, for decades, manufacturing has migrated to areas of the country with depressed economies and lower employment costs. Market efficiency is measured in, and saves, money. It is not measured in other ways...

Enjoy your soda: someplace in the country that needs it, you (cellio) are providing a job. But unless that place is Pittsburgh, you are undercutting your local economy for cheaper soda -and- we need not talk about the environmental impact of trucking sugar around the country to wet it and truck the canned results to you. :-)

[cellio]

In books, definitely.

Enjoy your soda: someplace in the country that needs it, you (cellio) are providing a job. But unless that place is Pittsburgh, you are undercutting your local economy for cheaper soda

Even if the alternatives to Amazon are regional or national chains? If we buy it locally it'll come from either CVS (near work) or Giant Eagle (the big grocery chain here). Fair point about the environmental impact, though.

(Aside: actually, it's sucralose and/or aspertame that's being trucked across the country; very little sugar gets drunk in our office. :-) )

[goldsquare.livejournal.com]

When I read "For God, Country and Coca-Cola", it described how there were many regional bottling companies around the nation - syrup was manufactured centrally (and under close corporate control) and then shipped for local bottling.

I suspect that is still true today. More than likely there is fine print on your can or bottle telling you where the soda was bottled.

I'm going to presume that the are not just bottlers but also distributors, who are responsible for getting the finished product to the store (and, possibly, onto the shelf).

I've been learning a lot about how grocery/HBA distribution works, for what are probably obvious reasons.