RuppelShell - THE HIGH COST OF DISCOUNT CULTURE ELLEN...

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THE HIGH COST OF DISCOUNT CULTURE ELLEN RUPPEL SHELL THE PENGUIN PRESS ! NEW YORK 2009
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CHAPTER SEVEN DISCOUNTING AND D SCONTENTS I’m not convinced you’re going to have the same immediate desire to go back to consumption and debt. A lot of young people have learned what it’s llke ~vhen you’re living on the edge and the bad times come. Their appetite is now towards more about living things differently. HAVING ANNOUNCED HIS RETIREMENT AS CEO OF WALk’dART. Price is a number, but properly decoded, it is no abstraction. Price tells us volumes about marketing strategies, government policies, and even vanations in the growing season. Economic realities, such as the effi- ciency of workers and factories are all reflected in price. Social and po- litical realities such as environmental degradation and human rights violations, are reflected as well. Discounting means that a particular good or a service is not desired at full price-or at least not designed enough m sell. The price of discounted goods is what economists call Price dasti¢ity is a measure of how much the demand of a good or ser- vice varies with price. A product or service is very elastic ff a slight change in price leads to a sharp rise or fall in demand. Usually, highly elastic goods and services are readily available, inter- changeable with other goods and services, and not critical for daily life. If a brand of ice cream gets too pricy, we can switch brands, eat cake,
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150 I CHEAP or skip s~veets altogether. The same can be said for many other corn [" modities. The price of meat, for example, is fairly elastic-raise or lower the price, and consumers respond. "~Vhen the price of chicken goes up, consumers can and do switch to beef or pork. An inelastic good or ser- vice, by contrast, is one in which changes in price result in no or rela- tively modest changes in demand. Think gasoline, cigarettes, a unique life-saving drug. Since consumers don’t have a real alternative, demand for these goods is far less sensitive to changes in price; the drug, for in- stance, is essentially inelastic. Successful merchants know how far to push price, and price elasticity is one factor in determining how to make the requisite trade-offs. As a rule there is less need to discount goods and services ",vith low-price elasticity. This brings into sharp relief one of the perils of cheap: The more essential the good or service, and the more unique, the less elastic the price and the less likely it is to be marked down. Absolute essentials for which there are no substitutes and for which we cannot wait are almost never discounted. Transportation, health care, private education, and housing may go down in price, but unless subsidized by govern- ments or other institutions, they are almost never cheap.
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