Tuesday, April 22, 2008

Matzo Shortage in San Francisco

So as I alerted you yesterday, there is currently a shortage of matzo in the San Francisco bay area. The New York times highlights Jews wandering from store to store in search of their Passover staple.

So what could the economic reasoning be for the shortage? The times and several other articles have blamed Manischewitz, the major matzo producer, transition to a new oven that did not seem to be working yet. Manischewitz knew this problem was coming, so the economic lesson in the short run it is difficult to change production.

I think another possibility is that Passover was on Saturday this year so this left opportunities for two weekend Seders. So the opportunity cost of Seders fell, since preparing a Seder is easier on the weekend likely shifting the demand curve for Matzo.

Markets only work if there is good information on demand for suppliers. Maybe we can blame Wal-mart as this article on the shortage in Reno points out "Wal-Mart brought it in for Easter, not Passover," he said. "They put it up for clearance after Easter."

The good news is I think it should all be resolved by next year, when the new ovens come online. Typically shortages only last if there are constraints on prices or productions.

So to mix sayings “Let My People Eat Matzo!”

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