The Midol Monopolist

A student writes that she became a monopolist in her freshman dorm — hoarding Midol to sell to her dorm-mates at the time each month when dorm-mate had a quite inelastic demand for this product. She also realized that at that time, there is an increasingly inelastic demand for chocolate-chip cookies, so she hoarded and sold those, too. She correctly notes that the two goods are complementary over time — more of both consumed on some days than on others. But I bet that over a short interval, they are substitutes — the satisfaction from one reduces the demand for the other. This illustrates how we need to think about the time dimension of consumer choice. I would also bet that her monopoly doesn’t last long. Anybody can bring the two products to the dorm and sell them — there are few barriers to entry. A better description is that she’s an innovating entrepreneur in what inherently will be a competitive industry.

(HT: A.S.)

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  1. 164 says:

    Was I the only one wh had to look that one up?

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    • Francesc says:

      No, you weren’t

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    • nobody.really says:

      This is just depressing. Cultural literacy is decaying all around us. Surely EVERYONE should have been exposed to the classics of Western literature – including Bill Cosby’s “The Toothache” sketch on his Why Is There Air album (1965).

      The sketch culminates with a girl offering the long-suffering Cosby a Miodol – and it works! So he keeps taking them – and they keep working! Sure, maybe every 28 days he feels a little irritable, but so what?

      Ok, the Miodol reference threw me when I first heard it, too. But at some point during the past 48 years, I figured it out.

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  2. Ashley says:

    While the logistical barrier to entry may be low, the social implications of snubbing a friend or popular dorm member by selling similar goods at cutthroat prices may deter competition. Peer pressure and all that.

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    • Enter your name... says:

      It doesn’t have to be “cutthroat” prices to be profitable. A large box of name-brand ibuprofen runs about 10 or 15 cents per pill. If you only want a couple of pills, it is less total money to buy a couple from your roommate for $1 than to buy your own bottle. Both parties could be equally satisfied.

      (Lesson for parents whose daughters are headed to college: Save money by sending a bottle of ibuprofen with her. Advanced lesson for daughters: Ask for a big bottle, so you can be the entrepreneur, not the customer.)

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  3. pawnman says:

    What, exactly, prevented the roommate from buying Midol and chocolate chip cookies from the same store, cutting out the middle-woman?

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    • Mike says:

      What stopped them? The laziness of college students knows no bounds. And doubly so for those that are already physically uncomfortable.

      Well-loved. Like or Dislike: Thumb up 11 Thumb down 2
  4. mannyv says:

    Economics always assumes that there are always entrepreneurs clamoring to fill a market niche.

    In fact, there aren’t. In this particular case someone with a trading bent founded a small business. Until she came along, there wasn’t one. When she leaves the dorm or loses interest, I’m pretty sure the business will go away.

    Not everyone wants to run a business, no matter how small it may be.

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  5. Erik Jensen says:

    This is a great way to avoid making friends. This woman would probably be better off if she gave away the Midol and cookies. Then when she needs a fake id, lock picking skills, pirated music, or homework answers, the other people in the dorm won’t turn around and charge her for these things.

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  6. Definitions says:

    “. . . she’s an innovating entrepreneur in what inherently will be a competitive industry.”

    Isn’t it already now a competitive industry, in a way? If we define the freshman dorm as the marketplace, do we define those living in that dorm who are self-sufficient (i.e. get their supply from elsewhere and don’t have to enter the dorm market for it) as competitors, or not? By being self-sufficient, they deprive her of potential customers, with the same result any successful competitor would have on her profits. Can self-sufficiency be called competition?

    What if, like in Wickard v. Filburn, 317 U.S. 111 (1942), the self-sufficient student has more supply than she personally needs, and could if she wanted (but doesn’t want) to sell her excess. Then, is she a competitor? Or is that confusing economics with law (in that they may use the same words, but the meanings aren’t always the same)?

    I guess you would define the marketplace as: at point X in time, it is all those females who lack supply to meet their need, thereby eliminating through definition all self-sufficient females.

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