Confusing the Satisfaction of Some Consumers’ Preferences for Market Failure

by Don Boudreaux on November 26, 2011

in Competition, Current Affairs, Myths and Fallacies, Property Rights

Only by implicitly assuming that consumers are automata who mindlessly flood into retail stores the moment doors open for business can Robert Frank conclude – as he did earlier this week in the New York Times – that pre-dawn holiday retail-store openings are the result of a competitive struggle that ultimately harms everyone.  But consumers are not the passive fools that Frank presumes them to be.  They have preferences, on which they can act, regarding the hours at which they shop.  If enough consumers want to sleep in without losing ready access to all of This Season’s Must-Have Holiday Gifts, one or more retailers will have incentive and ability to cater to these consumers.

Such retailers can advertise “We stock a huge inventory of all the holiday gifts you want and we never open earlier than 10am!”  Problem solved.  Late-sleeping shoppers will then be assured they can awaken at a respectable hour before trundling down to shop at such retailers.

Want evidence?  Consider the fact that the vast majority of retailers, even during the holidays, in fact do not open before sunrise.

Frank has long been consumed by his vision of market competition as a negative-sum game.  He here carelessly allows his bias to be confirmed by evidence of nothing more than some retailers’ successfully catering to some consumers’ preferences for the excitement of pre-dawn holiday shopping.

UPDATE: The New York Times‘s great science writer, John Tierney, offers the following thought to me in a private e-mail:

I would guess that the retailers are doing this at least in part for the free publicity — the shots of people camping outside the Best Buy sign — so they’re offering low prices as a way of paying the performers in their publicity campaign.

Yep.  A very good point.


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