Monday, April 11, 2011

The Invisible Hand That Created the $1,500 Stroller

Slate has an article on the Bugaboo the $1,500 stroller. Many people probably think $1,500 is too much for a stroller. I do not own a $1,500 stroller (I think ours was $200), but it does not surprise me based on four reasons.

First as income goes up people spend more on somethings. People like to spend money on their children, so we should expect over time as incomes increase the demand for upscale stroller to increase.

Second, I'm pretty sure there is a growing number of urban/wealthy parents who also spend a lot of time with their kid. For people like me, I walk my daughter Sylvia in a stroller to the grocery store, park, and other places at least twice a week. We have a car, but many parents substitute high quality strollers for cars in urban areas. Where I live it is faster for me to walk with a stroller to either grocery store within 1/2 mile of my house than it is to drive and load/unload the car.

Third, sometimes for luxury products higher price is taken (mistaken) as a signal for quality. In that case some products (college tuition, sports cars, cologne, and wine) people buy more when the price goes up and this violate the law of demand which is as price goes up people buy less.

Four, what else our the babies on Etrade going to do with their money.

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1 comment:

Bob Gitter said...

OK, maybe if it has an expresso maker, I could see the price, but otherwise, nah.