Textbook Definition of Competitive Market: A market characterized by a large number of small, identical firms (and buyers), where each firm is a "price taker," and the demand for an individual firm's product is perfectly elastic. In the long-run, profits for each firm are zero in a competitive market, as a result of entry/exit.
She-conomic Definition: Provo, Utah is a rather competitive market for LDS dating. There are many suppliers and demanders of dating relationships, and many good substitutes (how different is "Peter Priesthood" from "Patrick Priesthood"?) As a result, some individuals find it difficult to engage in meaningful ("profitable") relationships, because as soon as a relationship seems to be going well, one of the parties is prone to "exiting" relationship with said partner and "enter"ing into a relationship with a close substitute. The result can be disheartening. But, assuming that barriers to entering new relationships are low, we might expect young men and young women to be able to rebound and move in and out of relationships fairly costlessly.
What "real-life" conditions challenge the explanatory power of the competitive market model in dating? Is every other guy/girl a "perfect substitute" for your ex? What kinds of factors prevent easy entry and exit in relationships?
Herein lies the problem with Provo dating - suppliers of relationships fail to differentiate themselves. They all strive for conformity, and they compete on the basis of a limited set of product attributes. But who can blame them? Demanders of relationships have a narrow set of product criteria. And the market will provide that which consumers demand. Perhaps suppliers should identify unmet needs in the marketplace and introduce new product features that increase the switching costs and improve their competitve edge. Of course these differentiated products would likely come at a higher price, and with extremely price sensitive consumers, it would be a hard sell.
ReplyDeleteWell said, Chippy. Spoken like a true V.C. Perhaps one of the big differences between dating markets and goods/service markets is that goods/service vendors obviously want to sell their price at the highest price consumers are willing to pay, but they are not emotionally attached to prices and are therefore willing to compete relatively aggressively on price to clear their market. Daters, on the other hand, do not and should not "sell themselves short" by discounting their unique value just to "clear the market" (get hitched). I'm sure there are suppliers out there for even the most "differentiated" demanders. I guess it's just a matter of doing due diligence, and learning how to segment and target the right markets, which is time consuming but most certainly worthwhile in the long-run.
ReplyDeleteI get it now, that's why in more inefficient markets, such as LDS singles in Palm Desert California, you can find some very undervalued securities which despite the fact that they are still single (none is buying them), they have a fairly large marginal utility and a significantly high NPV. Okay, well maybe that's more finance than econ, but you get the point.
ReplyDeleteLove your blog Megan! This is a winner, it should be featured in the economist or some major publication. What a great relative way to learn economics principles. Sevak
Haha, thanks Sevak! Love ya, brother! :)
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