Thursday, 26 June 2008

Beer at Market Prices

A friend sent me this post on the Freakonomics blog about a bar in Germany where the "market prices" of the beers available are adjusted dynamically according to supply and demand.

I have discussed this possibility before, and it is great to see that it is actually being implemented somewhere. Imagine the possibilities:
  • Could you "sell short" a new beer after tasting it and finding it to be a stinker, thus profiting from your good taste?
  • Apparently it is possible to "pick up a breakfast bargain or take advantage of a lunch time sell-off." Would the effect of this for the bar be to spread out demand, and therefore reduce peak requirements for service? For example, if prices are highest at the peak of the lunch hour rush, and price-sensitive consumers respond by coming a half hour earlier or later, the bar may be able to get away with fewer servers.
  • Presumably, this would encourage freshness - beers that would otherwise have low turnover would become progressively cheaper, encouraging demand to drain the keg before spoilage occurs.
  • Since taxes are often a percentage of the sale price, I am curious how the bar calculates its tax liability. It may require some computing with each sale.
  • Speaking of computers, I'd imagine it would be too complicated (both legally and practically) to have patrons actually buying and selling, so how would you implement the system? A program which adjusted prices downward by a fixed percentage after periods of low sales, and vice versa?
The addition of market incentives (unsurprisingly) seems to open up all sorts of possibilities for efficiency! What other implications are there for such a pricing scheme? Would you go to such a bar?

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