Competition

In this Planet Money podcast, they explore why milk is usually in the back of the store. The two prevailing theories are:

  1. Since it’s a high volume item, putting it in the back gets more shoppers to walk through the entire store so they buy more.
  2. Because it’s easier for the store to keep the milk cold from the truck to the cooler.

Michael Pollan represented #1 and Russ Roberts #2.

There’s a couple reasons I enjoyed this podcast beyond the topic being interesting.

First, Russ Roberts, host of his own podcast (commonly referenced on this blog) EconTalk, is interested in finding the truth, rather than just being right. This was evident in that there were a couple of times in the pod when he helped the other side make their argument. I think that is a rare and refreshing quality in world that seems more full of people who are more interested in being right.

Second, I think Russ did a great job of explaining how competition keeps businesses honest.

His argument against #1 is competition. It’s kept in the back because it’s cheaper and shoppers prefer cheaper milk over more convenient milk, otherwise competition — which is high among grocers — would have discovered the preference.

It’s worth a listen.

 

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