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42 sats \ 2 replies \ @kepford 3 Jul \ parent \ on: Should a company police RRPs and fight scalpers? econ
Very good point. Going with the Costco example their hotdogs were something they said they would not raise the price on. I mean, I don't like their food but they do sell a ton of food in their fast food area.
~ Yogi Berra
I'm obvs not in the US, but I do remember reading about how the Costco rotisserie chicken is their main loss leader. They subsidize it and people love it, and obviously buy more stuff when there.
same with the Big Mac etc, but this is classic market knowledge.
Talking about logic though, humans aren't super logical in general, and if a brand does something that angers its customers, even if it's economically 'the right thing', that will hurt their profits. Protecting the profit is the prime goal so you could say that doing the illogical thing, is actually logical , if it is a net benefit to the business.
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There are lots of examples from experimental economics of people perplexing economists by being "irrational" and it usually doesn't come from an inability to understand the situation but rather from having non-monetary concerns.
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