Tim Harford
Discover the hidden economic logic behind your morning cappuccino, the strategic placement of organic bananas, and the reason you can never find a decent used car.
Bargaining power in any transaction stems from controlling a scarce resource, whether it is a prime retail location, unique skills, or artificial scarcity created through legislation.
Companies employ subtle price-targeting strategies to identify price-insensitive customers, often using premium options or random sales to extract maximum profit without losing bargain hunters.
In a perfectly competitive free market, prices act as a truth-telling mechanism that seamlessly coordinates complex information about consumer priorities and production costs.