Coffee in Berlin

The local coffee shop and bakery near my apartment in Berlin charges €1 for an excellent cup of coffee.  The similar shop near my office, but on a main tourist street, charges €1.99 for an equal quality cup.  Similar quality coffee can be had for €1.50 at a bakery one block from my office in another direction, in a less touristy area with many office buildings.  I can explain the €0.50 difference from my local shop to the third shop as cost-based discrimination: I assume higher real-estate prices generate it.  The €0.50 difference between the two shops near my office must be mainly due to demand-based discrimination:  Tourists are unwilling to search, implicitly have a low demand elasticity and are an easy mark for the shopkeeper.


If I owned the building, I'd charge higher rent for the shop on the tourist route, so there could be more cost-based discrimination than you are allowing.

Shane L

Interesting! Tourists from outside the eurozone may also struggle to translate prices into their own currency, and so might buy overpriced products without realising.


You're drawing a conclusion from three data points?


No, he's drawing TWO conclusions from three data points.

Enter your name...

Well, more than that: three prices for coffee, but also three prices for real estate, three assessments 0f the tourist value for each location, three assessments of the quality of the coffee, etc.


How much for the coffee you brew yourself?


For a different perspective, ask your self how much does the coffee you brew your self cost?


I understand your point of view.
Altought I think if tourist bakery increases prices to a certan limit you will see a demand elasticity inverson, assuming that tourist are racional agents.



I'm not sure I buy the cost-based explanation - rent is an (overhead) fixed cost. They may need higher prices to cover this, but that comes back to demand as well - the area must have more affluent buyers or fewer coffee shops to support the higher markup over marginal cost.