Date: Thu Oct 28 20:41:54 1999 From: barry@CATO.ORG (Barry Macleod-Cullinane) Subject: Coke at any price??? To: LIBERTARIANS@LISTSERV.ARIZONA.EDU Reply-To: LIBERTARIANS@LISTSERV.ARIZONA.EDU (Libertarian Students at the University of Arizona)
Hi,
With the news that Coke may be planning to introduce a vending machine with different prices depending on temperatures, the limits of economic education can clearly be seen. Austrians would argue that a coke during a cold day (less than 80 F, ie, less than what human beings are intended to live in) is a different good to a coke on a day when temperatures were a much more pleasant 100F. And, as temps rise, so the nature of the good surely rises... further, even if one doesn't suggest that such an essentialist argument applies, on hot days, higher demand will manifest itself. The coke machine contains a limited number of cans. So, with a vertical supply curve, the heating of teh day shifts the demand curve outwards. By raising the price of the cans, th machine can better ration the supply to those persons whose demand is greatest, rather than the first to the machine.
Clearly, also, for those living in AZ, coke has to develop a machine that will lower prices when temperatures decline (or rise more slowly than usual).....!
Barry
Barry Macleod-Cullinane, M.A. Cato Institute 1000 Massachusetts Ave., N.W. Washington, D.C. 20001Direct Line: (202) 789-5234 Fax: (202) 842-3490