How to demonstrate perfect competition by bending ice-cream vans to your will

April 11, 2013 at 6:24 am | Posted in Business | Leave a comment
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Whip it good!

Whip it good!

This true story teaches the theory and practice of cutting yourself a better deal in just about any purchase you can imagine.

Price comparison is much easier than you think.

And it’s fun!

Read on to see if you agree.

Cold cash

Bored mates Bob and Rob* sat outside the Victorian Arts Centre on a bleak winter’s day.

Before them were parked two almost-identical ice-cream vans.

Economics student Bob asked Rob if he’d like to see a demonstration of ‘perfect competition’.

Rob asked what that was.

Bob explained that perfect competition involves:

  • A homogenous (i.e. very similar) product.
  • Full information on prices.
  • Equal access to suppliers.

Bob said the two ice-cream vans offered precisely these conditions.

He then predicted that by using perfect competition, he could get two ice creams at 20% off.

Rob grinned with disbelief, then told Bob to knock himself out.

Ice ice baby!

Bob approached the first van.

He told the first ice-cream man he’d buy two chop-dips with nut sprinkles if he offered a 20% discount over his competitor (mere metres away).

The man refused.

So Bob went to the second van and repeated his offer.

The second ice-cream man was uncertain.

Bob pointed out that, as there were precious few customers on this cold day, it was very much in the man’s interest to give the discount.

If he didn’t, he’d miss the sale.

Instead, it’d go to his rival.

And he’d have to ditch his stock at the end of the day.

The second ice-cream man thought about this, then agreed.

Bob returned triumphant.

Rob was amazed.

And the ice creams were delicious.

Take-away food for thought

This simple tale holds essential truths:

  1. Comparing suppliers is every customer’s right.
  2. It’s not hard to do; just ask. You could save an (ice-cream) truckload!
  3. Harsh economic conditions (like now) are the best time to compare.
  4. Rather than shaft all suppliers, comparison rewards flexible ones with business.
  5. You’ll therefore do us all a favour by having a go.

Play time

Today’s trading conditions and technological advances are moving us ever closer to perfect competition.

What happened with those ice creams applies to a fast-growing number of purchases.

All the way up to the biggest buys of your life – like cars and homes.

So get out there and scoop yourself a cool deal.

You’ll find success tastes very

sweet!

🙂

* I changed the names, but this story is true.

Brought to you by The Feisty Empire.

First published on Finder.com.au.

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