You Mean We’ve Been Paying All That Money for Made-in-China Thomas the Tank Engine?

It’s been a few years since I bought any “Thomas and Friends” toys for my son, so I don’t think any of the approximately 18,000 trains he owns are part of the recall that was just announced. It covers toys sold in the U.S. from Jan. 2005 through June 2007; they are thought to contain lead paint, and they were made in China.

I must say that I’m surprised to hear that Thomas toys are made in China, only because they’re so incredibly expensive. A typical little engine goes for about $10; a big one or a double goes for $20. They are very, very high-quality wooden toys (except, of course, for the apparently poisonous paint), and I had always assumed they were made in, oh, Wisconsin or somewhere similar. Why else, I wondered, would they cost so much?


Monopolistic competition. These are basically toy trains, but the company that makes Thomas have successfully branded Thomas toys, allowing them to charge a price over marginal cost.


Try $29 for Thomas's friend James with tender light and motor- a gift for my 2 yr old grandson. I tried to return this one today and was told it was not subject to the recall. I asked the clerk, who was busy boxing up a large display case of Thomas toys, if she would give the toy to her child? I can't wait till he is older so I can get him the into "G" gauge LGB trains-German made indoor/outdoor very high quality.

The real issue is the ongoing quality/safety of Chinese made goods.


#1. How can it be monopolistic and competitive, at once? Marketing puts pricing as a feature in itself - you pay $20 for a 50c train because the price ticket is a feature.


When my friend took a missionary trip to China they took the toys from McDonald's Happy Meals made in China. The circle of life.


Your son only has 18,000 engines? You clearly don't love him as much as I love my son.


Conspicous consumption.

"Martha, look how much this costs. It must have been made in the USA! Probably by union workers, even!"


Remember Stephen, that price is not set by the manufacturer, but by the market. In this case the market has no problem paying 10 or 20$ for a toy.
If people think that only worthless trinket come out of China, they will be in for a surprise sometime soon :)


Price-Quality messaging...i.e. The Thomas brand must send a certain message about quality that should be matched by the price. If the Brand was very high-quality but the toys came out with cheap/low prices, the offering would not be in alignment with custome's expectations.

Also, Parents buying the toys for their children are less price-sensitve for popular toys. The brand also carries some very good attributes, wholesome, educational etc. Informed parents price-sensitive or not, may percieve these values and be willing to pay more.


This is probably another example of a good that used to be made in America and was offshored to China to save costs. The company certainly could lower the price and pass the savings on to the customer, but they have absolutely no incentive to do so. Instead, the company pockets the additional profit.

Crap like this is part of the reason the general public is suspicious of free trade. Economists tell us that we'll get cheaper goods, but then the prices never go down. We keep paying the same amount and companies pocket the difference.


Re #3 - "monopolistic competition" is a pretty standard economic phrase. It means that each product is different, wuith no two producers making the same thing, but where they're all similar enough to be close substitutes. The standard example is fast food burgers - McDonald's burgers are unique and nobody else is allowed to make the exact same burger, but you can head over to Wendy's and get a fairly similar burger. Similarly, in this case, they're all toy trains, but there are individual features of various models that make them unique, and thus allow for price differentiation.


#10: "McDonald's burgers are unique and nobody else is allowed to make the exact same burger"

Say what? What's unique about the standard McDonald's hamburger, and what law prevents anyone else from making a similar mediocre hamburger?


They are unique in the branding, not the ingredients. Even if someone put the exact same stuff into a burger, it wouldn't be a "McDonalds" burger because it isn't branded "McDonalds."

Interestingly, it would even taste different to the comsumer.


Not surprised. I paid $365 for the designer hand bag sitting next to me and I know for a fact that most of them are now made in China. Price doesn't always indicate where things come from.


#13 And you could have bought the same quality bag, (same LV/Prada label even) that probably came from the same factory, for $20 at a black market in Shanghai. Some young Chinese girl is walking around with the same bag, but paid 5% of what you did. That's why buying brand name items, is nothing but a social symbol. I'm sorry.


to #9

'Crap like this is part of the reason the general public is suspicious of free trade. Economists tell us that we'll get cheaper goods, but then the prices never go down. We keep paying the same amount and companies pocket the difference.'

That is only because consumers like you and others around you fail to exercise your beliefs in the form on an economic vote - e.g, don't buy the train.

Your buying the train is a message to the business that the train is correctly priced. The public is suspicious of free trade only because they fail to understand it. The train is by definition not overpriced because people are buying them.

Use your economic vote. It's worth a helluva lot more than your political one.


There is a lot of competition within China and other cheap labour countries about who shall get the rights to manufacture for some brand. This sees to it that quality is maintained because if they falter there is enough cheap labour and other manufacturors to replace it.

Of course, the brand itself should be judging the quality (and not to do a trade off between price and quality) rather than some government organisation or watchdog.


Reverend Wilbert Awdrey in England created the books in 1945. How did a British product become American? Just a brief search proves that the good old Thomas wooden trains have experienced troubles before. Take a look at what Wikipedia says about the defunct toy manufacturer Ertl Company, who also produced the trains when they " began production in Mexico, inevitably laying off the employees of the original Ertl factory which would become a warehouse/distribution facility and an outlet store". England, Chicago, Mexico, China... I wonder how much this list would expand after a more thorough search.


#9 & #15

Actually price go up. In most product the manufacturing cost slice of the total cost is dwarfed by the marketing cost. Marketing costs only go upward.

Off shoring has not occurred en masse like some predicted because it's not only a matter of paying people less money.

You should vote with your feet for sure but can you resist your son/grand son pressure to buy this overpriced train?


3 - See here for an explanation of "monopolistic competition."


15 - Monopolistic competition does have some welfare losses, because prices are higher than marginal costs of production, which technically means it's not an example of perfect competition. The standard response to critics who say what you said is that the welfare loss from regulating is larger than the welfare loss from monopolistic competition. Interestingly, the reason monopolistic competition can even be sustained in the longrun is because (I think anyway) consumers believe something is different about the product. So, Air Jordans can be priced at $100+ (however much they cost) because consumers think there's something unique about them such that no other shoe is a substitute. But if consumers didn't believe that, then of course the prices would have to fall because there are hundreds of sneakers competing. Sneakers, though, gets into conspicuous consumption and status signalling. I doubt that that is what is going on with these trains. I have two children under 6, and my oldest used to watch Thomas religiously. The characters and stories on the television show probably are key in all of this. It's not just a train - it's Thomas, from the show! And not just any train has that face and does all the things he does. So if you want to live in your imagination in these stories, you'll need this train. Still, it's an example of monopolistic competition.