When "Free" Becomes Too Expensive
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Care to guess the shape of the demand curve for iced coffee?
Of course, a price of zero can still be neutralized by a marginal utility of zero (or lower). Stated differently: if everyone thought, as I do, that iced coffee tastes rancid, then Starbucks literally couldn't give the stuff away. Go figure.
Starbucks announced on Tuesday that it was withdrawing an offer of free iced coffee to a limited number of employees and their friends and families in the southeastern United States.Amazing how the quantity demanded of a good increases as the price declines -- especially to zero. It's almost like a law or something.
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The company said an e-mail offering a free Starbucks iced coffee was sent to a limited group of employees in the southeast on August 23, with instructions to forward it to friends and family.
But apparently the promotional coupon, which was widely posted on the Web, was a little bit too successful: Starbucks said on Tuesday that, effective immediately, the offer would no longer be valid at any Starbucks locations.
Of course, a price of zero can still be neutralized by a marginal utility of zero (or lower). Stated differently: if everyone thought, as I do, that iced coffee tastes rancid, then Starbucks literally couldn't give the stuff away. Go figure.
Related Posts (on one page):
- The Best Defense is a Good, Um, Defense
- The Strange Case of "Barista v. Barrister"
- When "Free" Becomes Too Expensive
Posted by Kip on
31 August 2006
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