Cheap Pickles and What They Will Do

What do prices mean?  Over at Conglomerate, and not in so many words, Gordon Smith ridicules the argument that Wal-Mart distorts the market for pickles by systematically under-disclosing the effects of low pickle prices.  Since prices are so low, consumers over-consume pickles (so the argument goes), driving pickle producers to over-produce (if they want to sell to Wal-Mart) and ultimately both doing environmental damage and driving some producers, who can’t survive on low Wal-Mart margins, out of business.

The pro-Wal-Mart, pro-market response to this argument is, I suspect, pretty simple:  consumers are perfectly able to sort out what prices mean and what’s best for consumers; over some suitable length of time, a policy that lets Wal-Mart decide what to disclose, and that lets consumers decide what pickles to buy, is best for consumers in particular and for social welfare generally.

There’s a copyright angle here that shouldn’t be overlooked.  What if consumers aren’t fully able to sort out what prices mean?   What if producers assert copyright claims over prices themselves, limiting consumer access to prices, and/or to information about prices?  It’s happened, and it’s happened more than once, and occasionally courts have bought these claims.  A price may be “minimally creative,” in the language of copyright law, since it represents the seller’s selection of information to incorporate in a final number.  A let-Wal-Mart-price-its-pickles policy needs to be coupled with an IP rule that gives consumers access to price-related information.  Wal-Mart can own the pickles and sell them for whatever price consumers will pay.  But Wal-Mart shouldn’t be able to own the prices themselves.

The image (and for that matter, the post) is a reference to the famous Heinz pickle pin and an indirect homage to Pittsburgh.

One thought on “Cheap Pickles and What They Will Do

  1. For many commodities, though, a low price will not necessarily increase consumption. The “pickle problem” is probably a good example. Do present price levels result in consumers not consuming as many pickles as they would if the pickles were free? There may well be a measurable difference, but I strongly suspect that for pickles it’s virtually nil. People who like pickles buy pickles and eat them. Elasticity of demand — particularly nonconstant elasticity of demand, and elasticity that is dependent upon other prices (in this instance, perhaps the price of ground beef) — seldom gets any attention outside of the economics classroom.

    Instead, the money that “would have” gone to pickles will go toward other goods. Perhaps canning equipment so that one can avoid the flaccid Heinz pickle?

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