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There's some information asymmetry. A $24 pizza with free delivery might look to a consumer like a better deal than a $15 pizza with $9 delivery because the con
by jbay808 6y ago
There's some information asymmetry. A $24 pizza with free delivery might look to a consumer like a better deal than a $15 pizza with $9 delivery because the consumer can't tell that it's the same pizza. The $24 pizza might be more expensive because they use better ingredients, and the delivery might be free because of a loss leader. Or at least it might look that way to the consumer.
- wutbrodo 6y agoAnother, probably cleaner way around this information asymmetry is the reviews that already exist on these apps. If you order a $24 pizza and something the quality of Domino's arrives at your door, you're not going to enjoy that place and you're not going to rate it very highly. There are plenty of problems with review systems, but there are problems with price caps too.
- jbay808 6y agoAre you attempting to explain why we don't see restaurants offering free shipping while rolling the cost into the food price? Because we do see this happen, which suggests to me that reviews are not effective enough in practice to overcome the perception advantage of the information asymmetry.
- wutbrodo 6y agoNo, I'm suggesting that, to the degree that customers suffer from delivery fees rolled into prices, that should be reflected in reviews. Pricing isn't determined entirely by ingredient cost, so there's nothing inherently wrong with a $24 pizza A that has cheaper ingredients than an $18 pizza B (maybe Mr. A is just better at making a pizza). What matters is that the customer feels like the value they're getting from pizza A isn't dramatically misaligned with its cost (incl the delivery fee). This is the kind of thing that reviews do capture.