3 ms·

It's almost as if the hegemonic form of Econ theory is mostly bullshit that doesn't correspond to reality.

• dalbasal 9y ago
  Not in this case, though hegemonic is a big word here. You can still buy a mattress for $200 if you want. Micro-102 has all sorts of funky examples where things behave weird. This mattress situation is only possible because people want to buy a premium product "irrationally." This isn't housing. Mattresses and wine are pretty straightforward examples because "marketing" is straightforward, advertising and sales. It seems obviously wasteful when $400 of your purchase price was spent on FB ads, $400 on sales and only £200 on manufacturing. In the garment trade (a much bigger industry), there's still that insane manufacturing/price ratio. It's just that "marketing" is more complicated, involving premium retail experiences and difficult stock management. In both cases, you could hypothesise a different structure where stuff gets produced and shipped to consumers at a fraction of current prices. But... this particular thing can't really happen in markets where people want/need stuff and can't afford it. Cheap/cost-price alcohol (also wine) is also available, and popular. This can only really exist when people don't mind paying more.