so, last week thursday through tuesday I was in Mexico. during my stay there i happened to visit a flea market in Cancun. after walking away from the flea market i was reminded of how much i would have to catch up when i got home (since it was monday) and thought 'hey, i could use that market for econ' so here we go.
the flea market really amazed me as to how much of an excellent example it was of price discrimination. at this flea market, like many in mexico, it was expected that one would bargain for items. this means that every person who walks into the market has the chance to get a different price. although each vendor prices the item the same for everyone when they walk in it is up to the consumer as to how much they really pay.
for example, when i walked into a jewelry store with my new stepdad ron, he was interested in buying a pendant for my mom. the original price that the vendor said he would sell it for was $367 american. in less than half an hour ron had talked the vendor down to a mere $70, and he ended up throwing in a neclace chain to go with it for free.
this means one of two things, either the pendant really was worth very little to begin with, or the vendor knew ron would not budge, yet still wanted to get at least some money. this would indicate the mentality that a little money now is better than waiting and possibly not ever selling the merchandise. this is an interesting theory to me, being as vendors in the US have a set price, and a view that suggests that if one person doesn't want it at that price, someone else will. does anyone have any idea as to why there would be this fundamental difference in mind set?
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2 comments:
howdy~
Its a huge cultural difference and with that comes the economic difference. Its just a different type of market, most of it steming from the fact that in the flea market a lot of times people make the things they sell by themselves so it is up to them what they want to charge, what their time is worth. They arent working for a business so they dont have to charge a set price. When i was in mexico one of the guys wanted to sell me a necklace for $100, i told him all i had was $25 and he said "Deal," as simple as that!
Excellent example, Derek - even if we are all jealous that you went somewhere warm...with no snow...emphasis on NO SNOW... :)
I think when you go to markets in Mexico, it's like a big crap shoot. The things that are there overall don't cost much to produce. They set prices, and know that some people will not haggle...so they'll get that price. Otherwise, it's no big problem to haggle down, because that necklace your step-dad paid $70 for may have cost the seller $2 (not saying the necklace is cheap - just making a point). So - they have nothing to lose by setting high prices, especially if they are in a regular touristy place.
When I lived in Texas, we'd go down to Mexico all the time, because most stuff, including every day needs, were much cheaper, even with the crossing costs and taxes. So - everyone knew that once you crossed into the village, that you didn't hit the stores right by the border crossing, because they were the most expensive. Instead, you walked down a few blocks and over a few more, prices dropped dramatically.
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