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What I have seen in my travels is that those cafés and bakeries are not all that expensive in places where they are the norm. They occupy an environment where t

What I have seen in my travels is that those cafés and bakeries are not all that expensive in places where they are the norm. They occupy an environment where they have serious competition from truly comparable businesses, and a larger potential clientele. That brings market forces into play, which means they are more directly incentivized to compete on price and make it up on volume, while keeping quality high. Compare with the Great Harvest Bread location a mile or two down the street from my dad's house. (It's a chain, I believe mostly concentrated in the midwestern USA.) The bread is overpriced and hastily made. The only reason they can command such high prices is that there's nowhere else anywhere nearby that makes bread that doesn't come in a plastic bag is because they can position themselves as a sort of luxury good. But they probably also need to have high prices because people only buy bread there for special occasions.

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lotsofpulp 5y ago
> The bread is overpriced and hastily made. This is contradicted by this: > But they probably also need to have high prices because people only buy bread there for special occasions. It is not overpriced, it is prices according to its supply and demand.
- mumblemumble 5y ago
  Supply and demand is the simplest possible model for pricing, and only applies in certain contexts. The argument I'm trying to make comes close to suggesting that their bread functions as a sort of Veblen good. Which is an example of a kind of product whose pricing dynamics are slightly more complex than can be neatly explained by the econ 101 model.
  - lotsofpulp 5y ago
    Supply and demand applies in all contexts. A veblen good simply has a different demand curve, but I would need to see more evidence that bread of all things would be a Veblen good, which are due to their (presumed) utility for displaying status. Or maybe I do not hang out in circles where bread is considered a status symbol.

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lotsofpulp 5y ago

> The bread is overpriced and hastily made. This is contradicted by this: > But they probably also need to have high prices because people only buy bread there for special occasions. It is not overpriced, it is prices according to its supply and demand.

mumblemumble 5y ago
Supply and demand is the simplest possible model for pricing, and only applies in certain contexts. The argument I'm trying to make comes close to suggesting that their bread functions as a sort of Veblen good. Which is an example of a kind of product whose pricing dynamics are slightly more complex than can be neatly explained by the econ 101 model.
- lotsofpulp 5y ago
  Supply and demand applies in all contexts. A veblen good simply has a different demand curve, but I would need to see more evidence that bread of all things would be a Veblen good, which are due to their (presumed) utility for displaying status. Or maybe I do not hang out in circles where bread is considered a status symbol.