[OPE-L:7406] [OPE-L:937] Re: analyzing the potato chip effect

Gerald Levy (glevy@pratt.edu)
Mon, 3 May 1999 08:36:23 -0400 (EDT)

Re Michael P's [OPE-L:936]:

Thanks for the interesting citation concerning candy bars. (btw, in
addition to questions related to theory, I think the subject of the potato
chip effect, etc. is important from an *instructional* [pedagogical]
perspective since in my experience it is discussed in most introductory
economics classes, particularly in the "micro" section of the course when
discussing consumer behavior [e.g. consumer sovereignty] and market
structure [e.g. product differentiation in oligopolistic markets]).

What I think Michael's candy bar example has in common with the potato
chip effect includes:

o the importance of brand loyalty in consumer behavior;

o the arbitrary, yet deliberate, way in which pricing and packaging
decisions are made by corporations;

o deception by firms towards consumers;

o the importance of advertising and marketing to the above;

o that firms can, in many circumstances, choose between increasing the
price of their product or reducing its size/weight/volume, etc.

Admittedly, all of these topics are "micro" topics. Yet, they nonetheless
are important aspects of the reality of contemporary markets.

Certainly, there is a large literature in mainstream theory,
Post-Keynesian theory, and even institutionalism on these issues. Yet what
has been written from a Marxist perspective?

In solidarity, Jerry