September 23, 2004

Arbitrage!

The soda machines in the bottom of Evans Hall sell 20 oz. for $1.25. The soda machines on the second floor of Cory Hall sell 12 oz. for $0.60...

Posted by DeLong at September 23, 2004 12:09 PM | TrackBack
Comments

You won't be able to make much money because the market isn't liquid.

Posted by: Michael at September 23, 2004 12:11 PM

Now, if you can only sell a million cans of soda at Evans Hall you'll have $50,000.

Posted by: section321 at September 23, 2004 12:14 PM

Sorry, no arbitrage, because the market's incomplete: You cannot sell to either soda machine, so you exploit the price discrepancy.

Posted by: mf at September 23, 2004 12:20 PM

What about Soda Hall?

Posted by: ogmb at September 23, 2004 12:27 PM

Grandfather clause:

The Cory Hall vending machine is owned by one of the EE student institutions, and was in existance long before the ASUC negotiated an exclusive contract (then with Pepsi, now with Coke).

When the ASUC contracts were negotiated, the Cory Hall machine was grandfathered in, and is the one non-exclusive vending machine on campus. Thus, they were also the only source for Coke when the campus contract was to Pepsi, and their prices are also consistently lower.

Posted by: Nicholas weaver at September 23, 2004 12:27 PM

During my first year some of the vending machines on campus sold that drink Pepsi made that contained guarano. I still credit it with getting me through the first semester. I wonder why they discontinued it?

Posted by: ogmb at September 23, 2004 12:32 PM

More evidence that Brad is Fafnir and Fafnir is Brad:

http://fafblog.blogspot.com/2004_09_19_fafblog_archive.html#109594213154327085

Posted by: ogmb at September 23, 2004 12:44 PM

In Japan, I've seen individual soda machines selling 7 and 12 oz bottles (or whatever the metric equivalent is) for the same price. I got an explanation from a qualified Japanese economist: it's wasteful to buy 12 oz when you only want 7!

Posted by: Joe S. at September 23, 2004 12:49 PM

And the soda machine outside the Pavement Research Center at the RFS has them for $0.50.

Posted by: Jared at September 23, 2004 12:50 PM

The soda machine at a place i know of sells sodas for 25 cents. The soda machine upstairs at my place of work sells them for 50 cents. Do you want to move to COlorado?

Posted by: Carol at September 23, 2004 01:38 PM

When I was there, the coffee machine on the lower level at the Lumpkin School o' Law in Athens G-A gave out coffee at 35 cents a pop but it wasn't very good.

Posted by: rickhavoc at September 23, 2004 02:39 PM

I think my memory is right here--a few years back, MacDonald used to sell large and small sodas for the same price; apptly some customers were inconvenienced by lugging around a large (or were dumb as posts, whatever),

Posted by: buce at September 23, 2004 03:55 PM

"Do you want to move to Colorado?"

I would wait until Pete Coors relocates to someplace warmer, like Hell.

Posted by: Dragonchild at September 23, 2004 05:31 PM

Would you pay 60 cents for an empty can? So much less $1.25 for an empty polypropylene bottle?

The entire soft-drink industry is about selling containers.

Posted by: Frank Wilhoit at September 23, 2004 06:56 PM

Don't drink that stuff.

Posted by: Bean at September 23, 2004 08:33 PM

It's the handling charge of opening the 12 oz. cans and emptying the contents into the 20 oz. bottles that accounts for the pricing difference.

Posted by: Dubblblind at September 23, 2004 09:57 PM

My local supermarket sells Coke cans from its shelves at less than a quarter of the price the vending machine on the other side of the checkout sells them (and they sell no-name cola for about half as much again, but that's another story). They're within sight of each other less than 20ft apart.

They're selling refrigeration. But why does it take so much more refrigeration to chill Pepsi rather than Coke?

Posted by: derrrida derider at September 23, 2004 10:01 PM

Dr. DeLong,

My dentist said that it's not worth it. I read at some health site online (not WebMD, but someplace credible, I remember) that even diet soda will rot one's teeth. It's either the carbonic acid, phosphoric acid, or some sort of additives in it. Even if you have great dental insurance, you really do want your teeth to last, and in as natural a state as possible, don't you? This comes from someone who has gotten free soda as a restaurant employee since late 1998, and has gotten several cavities since (However, cause & effect cannot be proven, because I have been less than religious in said time period in brushing my teeth. But there is a definite correlation in my mind, as I had few cavities beforehand, when I might have had some irresponsible months, dental-health wise, but there was NEVER soda in my house.)

Posted by: James S. W. at September 23, 2004 11:07 PM

I just recently worked in a gas station. By far, the most popular size of soda was the 20 oz, which was $1.29 + tax=$1.38! I told everyone that it would be cheaper per ounce if s/he would buy either a drink from the fountain, a 2 liter bottle or a 12-pack of cans. I suppose people want varieties that aren't offered in the fountain (or perhaps think the carbonation mix is off so it doesn't taste right), and are too impatient to chill 2-L or 12-pk (and don't want to worry about drinking THAT much). The industry just knows how to profit off the most popular sizes. In general, though, I have noticed 20-oz bottles getting more expensive, both inside a variety of stores and in vending machines here in NC. Just over 6 years ago, they were usually 75 cents!

Posted by: James S. W. at September 23, 2004 11:13 PM

Haha, James, I'm one of your customers I think. I pick the 1L over any of the other sizes because a) I want a lot of soda, but 2L is wasteful because I don't want that much and soda is disgusting after the first night b) This was supposed to be why I don't use the fountain, but I really don't know. I guess it's quicker to just grab the bottle and go...maybe not 50 cents quicker.

Posted by: Quain at September 24, 2004 04:33 AM

In Atlantic City, there is this dive bar where in the 1980's-through-1991:

The beers on tap in a small glass cost $0.65

Now - today at same dive bar- it costs: $1.25

That's deflation or in today's dollar value vs. 1988 value- the cost probably has stayed the same.

Posted by: Dave S at September 24, 2004 07:12 AM

Note the conflicting world views of buce and the Japanese economist - according to the economist, Japanese consumers would rather have the amount of soda they feel like drinking than simply buying "the best value." Buce considers such behavior dumb as a post.

Anyone care to check on the relative obesity rates in the US and Japan?

Posted by: JRoth at September 24, 2004 07:54 AM