Examples of the Economics of Pricing

Here’s a couple of articles that have recently caught my attention, all of which illustrate some of the economic issues surrounding pricing.

Readers of this blog may recall my entry on cinema pricing last month. If not, you can read it here. The prolific piracy of DVD’s in China is discussed in the early sections of this article, which looks at the costs of producing a pirated DVD vis-a-viz the cost of going to see a movie at the cinema in China. Towards the end of the article, you will find a discussion on the economics of a Wal-Mart proposal to supply DVD’s-to-order, in-store (another example of the transferability of pricing, perhaps?).

On a less cheerful note, but one everyone has to confront sooner or later, the cost of chapel crypts at Woodlawn Cemetery in Detroit have increased between 42% - 100% in the last couple of months. Why? Because Civil Rights campaigner, Rosa Parks was interned there last October. Perhaps an illustration of cross-price elasticity (?), you can read the story here. You can also ”buy it now” two side-by-side plots at the cemetery on eBay for $100,000

Finally, in what may come as a surprise to hotel managers and no one else, it seems the economics of the minibar just don’t stack up. The costs of servicing hotel room minibars far exceeds the revenue they are generating. See which hotels minibars are starting to disappear from here.