Going "Green" to Increase Profits

One of the hottest topics among business people is how to increase profits by being environmentally friendly. There are many ways to achieve this. At hotels, for instance, by not washing towels during a guest’s stay unless the guest asks, the hotel saves both money and the environment. Green innovations can be featured in advertising campaigns to attract customers. Another potential benefit of “going green” is that it makes environmentally minded employees happy, increasing their loyalty to the firm.

A Berlin brothel has hit on another way to use environmental arguments to its benefit: price discrimination. Mary MacPherson Lane writes in an AP article:

The bordellos in the capital of Germany, where prostitution is legal, have seen business suffer with the global financial crisis. Patrons have become more frugal and there are fewer potential customers coming to the city for business trips and conferences.

But Maison d’Envie has seen its business begin to return since it began offering the euro 5 ($7.50) discount in July, Goetz said.

To qualify, customers must show the receptionist either a bicycle padlock key or proof they used public transit to get to the neighborhood. That knocks the price for 45 minutes in a room, for example, to euro 65 from euro 70.

Although the brothel says the reason for the price discount is that it wants to be environmentally conscious, it sure looks to me like the brothel is dressing up some good old-fashioned price discrimination arguments in a green disguise.

Customers who come by bus or bicycle are likely to have lower incomes and be more price sensitive than those who arrive by car. If that is the case, the brothel would like to charge such customers lower prices than the richer ones. The difficulty is that, without a justifiable rationale, the rich customers would be angry if the brothel tried to charge them more (and indeed, how in general, would the brothel know who is rich?). The environmental argument gives the brothel cover for doing what it always wanted to do anyway.

(Hat tip: Daniel Lippman)


Darren

Studies have shown that yes, cyclists and transit users are generally lower income worldwide. However, I don't necessarily make the leap that the authors do that this promotion is backdoor price discrimination.

Perhaps the liability risk to the brothel of a cyclist/transit John is lower, as these patrons are also proven to be healthier than car users, and thus more likely to withstand unscathed the, uh, services rendered.

Perhaps the neighbors complain about vehicle traffic and parking going to and from the brothel.

Perhaps the brothel pays a variable cost for customer parking.

jed

What if the US started buying up the poppy crop from farmers in Afghanistan at a price that is higher than the Taliban will pay. And we corner the Afghan market. Eventually. We would have to protect the farmers, of course. and we may have to compensate some nations that depend on the opium trade (illegally most likely). Let's say that we also pay the farmers to change to a food crop and we subsidize the difference between the food and poppy crops. Wouldn't we be able, through these tactics, to deny the Taliban of a major source of income?

I would like to here what you think. Where are the weaknesses in my idea and could those weaknesses be elimininated?

Jed

econobiker

"One of the hottest topics among business people is how to increase profits by being environmentally friendly."

Which leads to the paradox that often the "green" solutions ignore the lowest profit cost solutions for higher profit/cost solutions. An example is green LEED housing that desires all types of energy efficient and reused materials but fails on basic items such as insulating hot water pipes or putting hot water convertors in hot dead airspace attic spaces to reduce enegy costs...

Randy

Unlike other products that soothe the effects of global issues, I am curious as to why the brothels market a discount when most of the American public are paying premiums for similiar services? I suppose all services are variations on a theme, kind of like, what does the price of eggs in China mean to me? Is there a senior citizen or happy hour discount? How about a membership card and an express lane,er closet? Getting some green has at first glance some real meaning.